View Full Version : Takeover bid for Virgin Blue

22nd Aug 2005, 02:03
Toll Group to takeover Patricks. The move could see Sir Dick owning a little over 40% of VB.

ASX link (http://www.asx.com.au//asxpdf/20050822/pdf/3rz0mw235vzyz.pdf)

Sir Dick is thumbs up to offer
Virgin Group Responds (http://www.asx.com.au//asxpdf/20050822/pdf/3rz672y7ns6ch.pdf)

Toll has large airfreight volumes and following the Patrick acquisition and Virgin Blue ownership restructure, we intend to work with Virgin Blue to assist it to develop a successful airfreight linehaul business.

Beer Can Dreaming
22nd Aug 2005, 02:27
Interesting times indeed.

Good time for Sir Dick to perhaps buy back in.
The VB share price rose 8 cents on Friday on speculation after the Toll Holdings offer, only to have the share price plummet to its lowest ever level of $1.60 once market realisation occurred.

It appears that Chris Corrigan has been given a direct slap in the face by Sir Dick after he mentions the frustrations of being a "minority shareholder" and witnessing the delays of "implementation of a frequent flyer scheme".

Now didnt Sir Richard blast the concept of Frequent Flyer and loyalty type schemes as well as the use of business class for his low cost model when launching VB in the first place?
Wasnt discriminatory a word he used for concept of business class on a low cost carrier?

He rode the gravy train after the collapse of Ansett, insisted that the use of loyalty schemes were a scam and that business class was distasteful for an airline like VB.
He also enjoyed relatively stable fuel prices.

Now Branson's low cost model hasn't worked as well as he hoped, he's going back on his word and Chris Corrigan is doing his damdest to run this company like a real airline with seriously rising direct operating costs, only to be slapped in the face by Branson.

I for one would not like to publicly insult Chris Corrigan and slam the way he has ran the airline over a short period of time.

Interesting to say the least and dont expect Corrigan to take it laying down.

22nd Aug 2005, 03:18
I just found an article from almost a year ago to the day that put things into very good perspective.

What the article didnt bank on was the rising cost of fuel since then as well as the other numerous woes.

The article finishes by saying something along the lines of " they will have to work alot harder to keep the share price falling".

Godfrey reackons he doesnt worry about the share price.
I wonder whether his masters think the same?

22nd Aug 2005, 03:46

From this end it seems everyone wants Patrick Shares but nobody but Branson wants Virgin Blue:

Toll would offload Virgin Blue
From: AAP By staff writers with AAP
August 22, 2005

TRANSPORT and logistics firm Toll Holdings would sell down its interest in Virgin Blue if it succeeded with a $4.6 billion takeover bid for its owner and rival Patrick Corp, the company said today.

Toll (tol.ASX:Quote,News) will offer 0.4 of its shares and 75 cents for each Patrick share.
Patrick (prk.ASX:Quote,News) shareholders will also receive an in specie fully franked special dividend from Patrick of 0.3 Virgin Blue Holdings shares.

The offer values Patrick shares at $6.70 per share or about $4.6 billion. Patrick last traded at $6.45.

Patrick Corp said today it would review the unsolicited $4.6 billion takeover bid by logistics firm Toll Holdings as soon as practical.

"The chairman of Patrick advises shareholders that the proposal by Toll is unsolicited and that he will convene a meeting of the directors to review the proposal as soon as practical," Patrick said.

The bid is a shock for financial markets and comes only a few months after Patrick Corp, led by chief executive Chris Corrigan, boosted his ownership in Virgin Blue to a majority holding.
Toll said it would restructure Patrick's current 62.4 per cent shareholding in Virgin Blue (vba.ASX:Quote,News) through a reduction in the merged group's Virgin Blue shareholding to a small strategic stake, possibly as low as 10 per cent.

Under the restructure of the Virgin investment, Toll said it would dispose of 15 per cent of the shares in Virgin Blue (presently owned by Patrick) through a share offer with the sale price determined by a bookbuild, fully underwritten by Virgin Group at $1.40 per share.

"Toll has entered into an agreement with Sir Richard Branson's Virgin Group, which currently holds approximately 25 per cent of Virgin Blue, in connection with the proposed restructuring of the shareholding in Virgin Blue," Toll said.

"The focus of Toll's ongoing relationship with the Virgin Blue business will be in Toll's core airfreight forwarding market.

"Following implementation of the proposed ownership restructure of Virgin Blue, the merged group's capital employed in the aviation business is expected to be less than five per cent of the merged group's total capital employed, down from an estimated 38 per cent within Patrick as a standalone company."

It would also grant call options to Virgin Group for up to 15 per cent of the shares in Virgin Blue (presently owned by Patrick) at prices from $1.40 per share up to the bookbuild price, which can be exercised to the extent Virgin Group does not acquire underwritten shares.

Toll said the proposed acquisition of Patrick would benefit Patrick shareholders by providing them with improved growth opportunities, with an increased focus on freight-based transport and logistics businesses as a result of the Virgin Blue ownership restructure.

The offer was conditional on Toll acquiring not less than 90 per cent of the shares in Patrick as well as approval by the Australian Competition and Consumer Commission.

The merged group would be one of the top 25 companies listed on the Australian Stock Exchange with a market capitalisation of about $8.6 billion.

Patrick's share price has fallen sharply this year, after it launched its takeover of Virgin Blue, easing the way for Toll to make its bid.

However Patrick noted that it was "well into an investment cycle that should lead to long term consistent strong growth from a stable of high quality strategic businesses and assets".

Toll and Patrick already have a partnership through their joint ownership of rail operator Pacific National.

Toll currently owns 4.3 per cent of Patrick and now intends to buy all the remaining shares through its off-market takeover bid that values Patrick at $6.70 per share, or about $4.6 billion.

king oath
22nd Aug 2005, 05:12
I wonder if Toll would be interested in off loading Virgin to a certain chinese gentleman from Singapore to enable them entry into the Australian market. They might get an offer they can't refuse.

Interesting times ahead.

22nd Aug 2005, 11:05
Sounds a bit like Ansett revisited. The main game becomes lost is sea of mergers, acquisitions and restructure upon restructure.

22nd Aug 2005, 11:56
Now that would be interesting king oath. The Chinese gentleman wouldn't stand for the absurd recruiting policies that have been practised in VB since its start up.

Just like SQ didn;t tolerate, nor does it tolerate to this day, ridiculous attitudes perpetrated by a few morons in that company.

Won't concern me because I'm not interested in going to the land of Oz, but it would many.

22nd Aug 2005, 12:56
Regardless of what happens, there are obvious changes ahead for Virgin. Personally I see them transforming into a more Ansett like carrier, albeit with far lower operating costs. It most certainly seems as if DJ have come full circle on their low cost plans... everything is being talked about in terms of service now. Virgin seems to be wading in an upper market low cost carrier region at the moment... can't quite compete with Jetstar, nor with Qantas.

I think most importantly somebody needs to decide what Virgin is going to be. As I recall one of the most fundamental elements of a business is it's business model... does Virgin have one at the moment? Low cost national carrier one minute... dives into the NZ market the next... only to have Corrigan say he wants to refocus on Aussie... talk of business class... does Sir Richard still wanna go long haul.... all this talk of different directions for the business... but where is the future planning?

I have the utmost confidence in DJ succeeding, but one must wonder what on earth the future holds in store for them at the moment.

Just my 2 bob.

22nd Aug 2005, 21:58
Ohforsure word has it VB is moving from "Low Cost" to "Extra Value" whatever that might mean.

Either way you are probably correct in observing the VB move away from Low Cost carrier. Initiatives plannned for the next few moths will reinforce the change in strategy.

22nd Aug 2005, 23:12
Bring back Richard!

23rd Aug 2005, 01:37
Come on relax737, the reason you didnt get a gig at VB is because of the way you carried on at your previous place of employ.Dont go bagging everyone at VB because youve got the sads.:{

24th Aug 2005, 04:08
Initiatives plannned for the next few moths will reinforce the change in strategy

Come on... I imagine boardroom tension at the moment is such that nothing will get done in the next little while!! The sooner all this gets sorted out the better, so that Virgin can concentrate on doing what it's there to do!!!

26th Aug 2005, 23:11
Virgin Blue have two very fundamental problems which are obvious I know. Firstly we just couldn't resist trying to add "value" to our product and thus increase our cost base. In doing so we have gone from an initially good "Southwest" replica to yet another "Southwest wannabe" with the only consolation there being that there is a bit more fresh air on top of that heap than at the bottom where so many have fallen before us. VB should have been in a position to shut out a Jetstar like competitior but instead they may as well have sent out invitations to slam doors in our face.

The second obvious problem is fuel hedging. The board took a high risk 'guess' that fuel would not go much higher than it was a year ago and except for actually getting into the airline business the business of flying airplanes should be treated as a low risk take no chances business. A year ago VB could make money when fuel was fifty bucks a barrel. Today it is trying to convince pilots that we are on average carrying 58kg of fuel per sector to much and thus encouraging more "dilligent" fuel management. Like its our fault somehow that fuel expenses are getting a bit out of hand. Better they hedged at fifty bucks a barrel and watched it drop to forty again than scoff at the chances of significant further increases. Fuel price and fuel price alone has shut down bigger and more sophisticated airlines.

Now Jetstar International. There should have been a big red shiny new widebody on the ramp in Cairns (just for effect) and eventually MEL or SYD the day Australian Airlines started service. There is a market for low cost international airlines and this one was more or less on a platter. The invitations have gone out again and VB may just well be cleaning up after that party as well.

Unfortunately when airlines become stock market volley ball's the stabilty of the airline and it success erode. The one thing still in favour is VB's size and relative security as the second carrier in Oz in terms of size. However if someone with this airline in its interest doesn't buy in and settle it at one end of the market or the other then it will end up on another bigger heap than the low cost heap, namely the has- been heap.

28th Aug 2005, 12:16
sweet polly etc.,, You obviously have me confused with some one else, or somebody who gives a $hit about VB. I have never applied to VB. I have watched with interest the way the former CP screwed the 'party faithfull' his former colleagues at Ansett, and set the course for pilots' salaries and conditions for the next fifty years, including creating a model for the CEO of QF to screw the pilots. Unfortunate but true.

My friend, I have never left a company on other than good terms, and will continue that way, galling though it may be at times. I have never started a brawl in Brisbane terminal for example, nor sent undertakers to pilots' houses to collect bodies, nor sent hate mail, nor painted graffiti on pilots' cars, etc, etc. I think you get the point.

I couldn't see myself ever working for a company that treats pax they way they do, air robics and mexican waves??!!!. I have friends there who are appalled by what the stupid hosties say over the PA; seems to indicate a total lack of maturity to them.

I'm a retiring type, even shy, and that type of conduct doesn't go down with me. Sorry, wrong guy this time.

Alpacau, I believe youre right on the board rom tension. It's a bit like the TV wrestling from all accounts, lotof grunting and chest beating.

29th Aug 2005, 01:33
Ah Relax mate,

For a person who couldn`t give a s$!t about VB, you`ve got a lot to say!:}