Article from Sundays papers
THE Airline Partners Australia takeover bid for Qantas has failed. At its 7pm close on Friday, acceptances had not reached the minimum 50 per cent needed.
It would be completely unconscionable for a quasi-judicial body to seek to overturn this -- allowing the late acceptance from a New York hedge fund to "take" acceptances to 50.6 per cent.
Especially not a quasi-judicial body that might be acting illegally if it tried to do that.
The Federal Court has just ruled that the Takeovers Panel is constitutionally prohibited from acting as a quasi-court.
So if the panel was wise -- an interesting question -- it should refuse to hear the application.
After all, apart from anything else, the takeover is legally over. Presumably the panel's "remit" to interfere is as well.
If "truth in takeovers" is to have any meaning, the "bid closes at 7pm" has to mean the bid closes at 7pm.
If not, what next? Any shareholder in any takeover can watch to see how things pan out; and then accept after the close if it suits it?
Second, rejecting the application is the only way to bring certainty to Qantas as a business and from an investment perspective.
That is the only way trading can open tomorrow with clear air. Offer over, acceptances returned to shareholders.
The alternative is fundamental and extended uncertainty.
Would a panel decision be appealed? Would it be sustained in court?
Is there anyone other than the greedily desperate bidder APA that could possibly think this would be an acceptable, far less desirable, outcome?
To have that uncertainty hanging over Qantas and its shares possibly for months?
The Qantas board has no alternative but to argue the case against the panel hearing, the application or endorsing what the bidders want.
In the interests of all shareholders. Both those who have accepted what is demonstrably an inadequate offer to anyone other than a parasitic hedge fund feeding off arbitrage cents.
And those who have not, who didn't accept because self-evidently they did not want to sell at $5.45 offered.
And almost as self-evidently would prefer the ownership to return to the old position rather than have 50.6 per cent ownership and control of the board handed to the APA main-chancers.
Because APA has disclosed what it has in mind for Qantas once it gets its hands on its rich balance sheet and lush cash flows.
The desperation with which APA has sought to get to the 50 per cent belies any suggestion that the $5.45 is an attractive price to a seller. To a buyer, absolutely.
Indeed, why is APA bothering at all? It has at best just scraped over 50 per cent; its bid and the finance for the bid are both conditional on getting to 70 per cent.
Before Friday, 90 per cent looked an impossible target. Now, 70 per cent does. So wouldn't it just mean the bid would fail in two weeks, rather than now?
No, because APA would reduce the minimum acceptance condition to 50 per cent and take any Qantas shares it could get.
In simple terms, allowing APA to keep the late acceptance would change the law to gift it more than $1 billion.
Now the Qantas board has not exactly covered itself in glory, by endorsing the bid too early, rather too enthusiastically, and at too low a price.
Then being extremely churlish about keeping shareholders fully informed about profit upgrades for the airline; while declining every opportunity to walk back from that enthusiasm, if not from the endorsement.
This is now the time and the opportunity to redeem itself, in the best interests of shareholders.
After which there will have to be major board renewal. It is impossible to see chairman Margaret Jackson surviving her enthusiasm.
CEO Geoff Dixon is another matter. Yes, he was part of the bidding team, but he's also been a very effective CEO.
He can and should stay.