Patrick Corp launches full take-over bid for Virgin
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i think QF will have some serios trouble when patrik tkae over VB, it will make his transport empire complete. first it was the trucking Industry, then the rail network and port, now aviation. QF via AaE has had a monopoly in air freight in OZ! Patrik has pretty much everything else.
Sure patrik might not be as big as QF on the shares side, but there is an Old saying in the land freight game "No one has ever gone broke in freight!"
Qf relies on revenue from PAX and air travel, VB and patrik has the never ending reliable revenue from freight, Road, Rail and sea.
Patrik and VB WILL outlast ANY price was QF wants to start!
My prediction for Vb under Corrigan control, will be VB Operating Combi aircraft, and moving into the more full service style. Business class has always been the money maker for airlines with greatest margins, and corrigan is no fool. VB will be Used as another freight movement avenue, with revenues supported by Business class and higher yield pax. he will leave the airborne $1 flying sardine cans to Jet* and QF.
Sure patrik might not be as big as QF on the shares side, but there is an Old saying in the land freight game "No one has ever gone broke in freight!"
Qf relies on revenue from PAX and air travel, VB and patrik has the never ending reliable revenue from freight, Road, Rail and sea.
Patrik and VB WILL outlast ANY price was QF wants to start!
My prediction for Vb under Corrigan control, will be VB Operating Combi aircraft, and moving into the more full service style. Business class has always been the money maker for airlines with greatest margins, and corrigan is no fool. VB will be Used as another freight movement avenue, with revenues supported by Business class and higher yield pax. he will leave the airborne $1 flying sardine cans to Jet* and QF.
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Corrigan is after ROI (return on investment), pure and simple. Lately, DJ has not been providing so its time to take over.
Wannabees would do well to take their heads out of the clouds and think more in terms of secure employment. Patrick is about profits, surely the last 12 months should have taught DJ a lesson in that respect, take on QF and take a bath.
Finally, Corrigan does not expand organically, he aquires. It may be possible that Patrick will make an opportunistic bid for a regional, but I think it unlikely we will see DJ plying the pacific with Corrigan at the helm.
Wannabees would do well to take their heads out of the clouds and think more in terms of secure employment. Patrick is about profits, surely the last 12 months should have taught DJ a lesson in that respect, take on QF and take a bath.
Finally, Corrigan does not expand organically, he aquires. It may be possible that Patrick will make an opportunistic bid for a regional, but I think it unlikely we will see DJ plying the pacific with Corrigan at the helm.
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Longjohn
I disagree with your thoughts. The way I see it is as follows.
VB has around 30% of the market which is equivilent to 50% of the old AN - QF sized market. The size of the market has grown extensively thanks to Impulse, Virgin and Jetstar started and low fares. More people are travelling.
VB can not grow much more mainly because of their product and Qantas won't let them. They are quite rightly protecting their market share.
The only way VB can grow and help other Virgin airlines is by supplying and receiving on carriage pax to/from Virgin Atlantic, Virgin Express and Virgin America. To do this they have to enter the Pacific market with a substantial sized airline e.g. 10 to 12+ four engined aircraft (no etops).
VB (Godfrey) isn't too keen on setting up another airline to service the Pacific - USA largely because it would be a totally different model to VB. This has been hinted at by Sir Dick in France last week when he said he would set up a separate airline if VB dragged their feet too much.
Patricks are as keen as Sir Dick on the full service international airline and that it would compliment Virgin Atlantic. Virgin Pacific would service medium haul (USA, Japan, etc - think Aust Ailines)while Virgin Atlantic would remain with the long haul such as the UK and Europe
Virgin Blue would be a feeder to Virgin Pacific who would then feed on to Virgin America. Same as Virgin Blue onto Virgin Atlantic who then feed onto Virgin Express. This works in the reverse also.
For this to happen and before SQ convince the govt on rights to the USA Virgin Pacific would need to be created through VB using their AOC and infrastructure. Without it the timeframe and cost of setting up again would blow out to double and could possibly allow SQ in.
The only way to ensure this happens is to allow Patricks to get the 51+% for control. Nothing much will change except for who is at the helm of VB. My bet is it would not be BG. An out of left field rumour is a former QF CEO with the initials JS. I think it could happen.
SQ would be a part of VP for the name and is the next best option to having rights themselves. Others have said that Corrigan has as much an ear in Canberra as QF have so it is easy to imagine the talks going around the hallowed halls now. It would be 'don't worry about giving SQ the rights we are setting up our own airline to do this and they will be a part of it anyway'.
If you were an MP which one would you go for - the Aussie VB (Corrigan who is a friend of the govt) or the foreign SQ. I'd say there would be no competition on this one.
This would not harm QF but would set up a duopoly which would have to be better than competing against a multitude of govt backed airlines if open skies was put in place. For the Virgin Group, which is now Virgin - Patricks - SQ through VB and VA, it is the only way to go and forms a truly global airline. For the country it gives two very strong airline companies that would be able to ward off any interloper such as the EK's of this world.
This is only my opinion but I reckon there are not many options and I think it will happen. I am going to buy shares in both airlines. Plenty of jobs for Aussies. We don't have to worry about the balaclavas and dogs. That was the only way that industry could be sorted out. It was the biggest rort job in Aust and everybody knew it.
I disagree with your thoughts. The way I see it is as follows.
VB has around 30% of the market which is equivilent to 50% of the old AN - QF sized market. The size of the market has grown extensively thanks to Impulse, Virgin and Jetstar started and low fares. More people are travelling.
VB can not grow much more mainly because of their product and Qantas won't let them. They are quite rightly protecting their market share.
The only way VB can grow and help other Virgin airlines is by supplying and receiving on carriage pax to/from Virgin Atlantic, Virgin Express and Virgin America. To do this they have to enter the Pacific market with a substantial sized airline e.g. 10 to 12+ four engined aircraft (no etops).
VB (Godfrey) isn't too keen on setting up another airline to service the Pacific - USA largely because it would be a totally different model to VB. This has been hinted at by Sir Dick in France last week when he said he would set up a separate airline if VB dragged their feet too much.
Patricks are as keen as Sir Dick on the full service international airline and that it would compliment Virgin Atlantic. Virgin Pacific would service medium haul (USA, Japan, etc - think Aust Ailines)while Virgin Atlantic would remain with the long haul such as the UK and Europe
Virgin Blue would be a feeder to Virgin Pacific who would then feed on to Virgin America. Same as Virgin Blue onto Virgin Atlantic who then feed onto Virgin Express. This works in the reverse also.
For this to happen and before SQ convince the govt on rights to the USA Virgin Pacific would need to be created through VB using their AOC and infrastructure. Without it the timeframe and cost of setting up again would blow out to double and could possibly allow SQ in.
The only way to ensure this happens is to allow Patricks to get the 51+% for control. Nothing much will change except for who is at the helm of VB. My bet is it would not be BG. An out of left field rumour is a former QF CEO with the initials JS. I think it could happen.
SQ would be a part of VP for the name and is the next best option to having rights themselves. Others have said that Corrigan has as much an ear in Canberra as QF have so it is easy to imagine the talks going around the hallowed halls now. It would be 'don't worry about giving SQ the rights we are setting up our own airline to do this and they will be a part of it anyway'.
If you were an MP which one would you go for - the Aussie VB (Corrigan who is a friend of the govt) or the foreign SQ. I'd say there would be no competition on this one.
This would not harm QF but would set up a duopoly which would have to be better than competing against a multitude of govt backed airlines if open skies was put in place. For the Virgin Group, which is now Virgin - Patricks - SQ through VB and VA, it is the only way to go and forms a truly global airline. For the country it gives two very strong airline companies that would be able to ward off any interloper such as the EK's of this world.
This is only my opinion but I reckon there are not many options and I think it will happen. I am going to buy shares in both airlines. Plenty of jobs for Aussies. We don't have to worry about the balaclavas and dogs. That was the only way that industry could be sorted out. It was the biggest rort job in Aust and everybody knew it.
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Ultralights - I hope you are right with the full service model. We need tomove away from the bus market ****star model that most of regional Australia has been forced to accept. Almost every passenger I deal with would welcome Virgin at up to 20% more in price offering full if cold galley service, and if they linked in the GDS Agents would throw even more support there way.
Ultra cheapies are a good marketing tool, but a total joke in the wider picture.
I just hope the good and honest crew at Jetstar can find employment with them oif they go full service/2 class so they can start enjoying their jobs again. They are far to good to put up with bus fodder.
Bring it awn!!
Best regards
EWL
Ultra cheapies are a good marketing tool, but a total joke in the wider picture.
I just hope the good and honest crew at Jetstar can find employment with them oif they go full service/2 class so they can start enjoying their jobs again. They are far to good to put up with bus fodder.
Bring it awn!!
Best regards
EWL
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While I agree with HGW that there is a very good chance that some sort of Virgin Pacific is on its way to link up the global network, Eastwest Loco, there is absoulutely NO WAY vigin blue will be offering a traditional full service in ANY sort of way.
It goes far to away from the user pay model. While I, like you, think everyone would love to see the start of another full service, it is just not going to happin. The benefits do not out weigh the cost for them. What you will see is expansions of the blue room concepts (which is slowly gaining momentum) and some sort of credit system for food etc on board as part of a package type thing for business Pax who want that wee bit more to make them feel special. ( I.e, a so called corperate type ticket, which includes refundable ticket, bue room access, and so much credit for onboard catering). Thats at least what my company has been told anyway.
Either way though, exciting times in terms of a new FUll serivce international carrier to the US. Oh how the business Pax have been screaming to themselves for years for a new choice after being forced to endure the Qantas SUB-PAR service for years.....
It goes far to away from the user pay model. While I, like you, think everyone would love to see the start of another full service, it is just not going to happin. The benefits do not out weigh the cost for them. What you will see is expansions of the blue room concepts (which is slowly gaining momentum) and some sort of credit system for food etc on board as part of a package type thing for business Pax who want that wee bit more to make them feel special. ( I.e, a so called corperate type ticket, which includes refundable ticket, bue room access, and so much credit for onboard catering). Thats at least what my company has been told anyway.
Either way though, exciting times in terms of a new FUll serivce international carrier to the US. Oh how the business Pax have been screaming to themselves for years for a new choice after being forced to endure the Qantas SUB-PAR service for years.....
Last edited by PureRisk; 29th Jan 2005 at 19:55.
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Interesting times ahead no doubt! I cannot see Patrick’s sitting back and letting the opportunity to fly the gold mine route to LAX. It’s only a matter of time, and once BG is gone im sure Sir Dick will have no problems teaming up with Patrick’s to beat SQ to the goal post. It’s a “fate a compli” that VB will be off stateside.
Purerisk. They said the same about getting new airplanes. But here we are; 45 new B737NGs and 2 more to come. Zero old junk like QF (B733 is this Africa?). BG, “There will be no lounges,” yet there are Blue rooms at the major ports now. Seat pitch, low cost, I think not; actually the same as QF economy. I’d like to see Magda squeeze her fat hide behind a Scum* seat. Blue Zone (wank) seating with more leg room. These concepts are hardly make VB a low cost airline. There’s no difference to American Airlines other than no First Class (u pay for food on flight less than 3 hours there). Have you noticed that VB never markets itself against Scum*? I can see VB taking on the AA model, u pay down the back and up the front you pay 3 times as much for the ticket. Try Ryan
, Air2000 , or Jet* if you want to see what a real sh1tty low cost operation feels like.
My bet is VB will have J class on certain -800 flying BNE-MEL-SYD for the tossers in suits. To say there’s “Absolutely NO WAY” it will happen is a large call.
Purerisk. They said the same about getting new airplanes. But here we are; 45 new B737NGs and 2 more to come. Zero old junk like QF (B733 is this Africa?). BG, “There will be no lounges,” yet there are Blue rooms at the major ports now. Seat pitch, low cost, I think not; actually the same as QF economy. I’d like to see Magda squeeze her fat hide behind a Scum* seat. Blue Zone (wank) seating with more leg room. These concepts are hardly make VB a low cost airline. There’s no difference to American Airlines other than no First Class (u pay for food on flight less than 3 hours there). Have you noticed that VB never markets itself against Scum*? I can see VB taking on the AA model, u pay down the back and up the front you pay 3 times as much for the ticket. Try Ryan
, Air2000 , or Jet* if you want to see what a real sh1tty low cost operation feels like.My bet is VB will have J class on certain -800 flying BNE-MEL-SYD for the tossers in suits. To say there’s “Absolutely NO WAY” it will happen is a large call.
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Well I may be wrong bankangle and time will tell........but I still think there is NO WAY they will have a J class. Most of the things you have listed have been done before and are pretty much based on the Jetblue model in the states. And yes Jetblue have ERJ's on the way and so do Virgin from my sources. Sooner than later too.
But over all, everything they have/are doing, still goes by the User pay model and dosent really cost very much more, to what they have anyway. Anyway time will tell your correct, but I think you will see business tickets the way I told you as the entry point but there will be no more than that.
The Virgin Pacific thing is completely different and will obviously be full service. Half of the Virgin Perception is the quality of service it gives. And on the LA monpoly, the Business Pax have been missing this when compared with Singapore/Cathay/Atlantic/Emerites type service they get on other routes. And this is where VP will clean up. Qantas are in for a rude shock on a route where so much of their international profit comes from, especially when its a corrigan/branson thing.
But over all, everything they have/are doing, still goes by the User pay model and dosent really cost very much more, to what they have anyway. Anyway time will tell your correct, but I think you will see business tickets the way I told you as the entry point but there will be no more than that.
The Virgin Pacific thing is completely different and will obviously be full service. Half of the Virgin Perception is the quality of service it gives. And on the LA monpoly, the Business Pax have been missing this when compared with Singapore/Cathay/Atlantic/Emerites type service they get on other routes. And this is where VP will clean up. Qantas are in for a rude shock on a route where so much of their international profit comes from, especially when its a corrigan/branson thing.
Branson rejects Virgin Blue bid
Billionaire Sir Richard Branson's Virgin Group today rejected a takeover offer by ports operator Patrick Corp for budget airline Virgin Blue as too low.
Patrick Corp, which already holds 45.95 per cent of Virgin Blue, launched a surprise $1.90-per-share bid for all the ordinary shares in Virgin Blue that it does not already own, on Friday last week.
Patrick Corp's offer values the airline at $1.99 billion.
The Virgin Group said in a statement today that its Swiss subsidiary, investment vehicle Cricket SA, had acquired 5.1 million more Virgin Blue shares on-market on Friday at an average price of $2.04.
Virgin Group said it had paid $10.1 million in total and now had a 25.1 per cent stake in Virgin Blue.
"As a 25.1 per cent shareholder, it is Virgin Group's view that Virgin Blue Holdings has much greater value than that indicated in the price being offered by Patrick Corp," the group said.
"The airline has been a remarkable success in the Australian market, building a strong reputation for outstanding customer service at a competitive price, whilst maintaining low operational costs."
Virgin Group said it continued to support Virgin Blue, its growth prospects and future expansion plans.
"I am extremely proud of the Virgin Blue business and the great team of people who have brought real competition, genuine value and friendly air travel to the Australian people," Sir Richard said.
A Virgin Group spokesperson said the Patrick bid had come as "quite a surprise".
"It's still very early days. Over the next couple of weeks, we'll be working out the next steps and we'll go from there," she said.
Asked if the Virgin Group intended to further increase its stake, the spokesperson said: "We have no comment on exactly what our next steps will be in that area."
Patrick Corp said on Friday that its off-market offer, which is being made through its wholly-owned subsidiary, Plzen Pty Ltd, realised "full" value for Virgin Blue shares.
Patrick said the bid price represented a 13 per cent premium to Virgin Blue's January 24 closing price of $1.68.
Patrick chief executive Chris Corrigan said the offer was important to Patrick shareholders because it would allow the company to take a clear majority stake in Virgin Blue.
Market analysts think it highly unlikely that Patrick wants 100 per cent of Virgin Blue.
Analysts say that Patrick, which gathers about 14 per cent of its underlying earnings from its Virgin Blue investment, is probably seeking greater influence over the airline's operations and strategic direction.
Virgin Blue shares soared 15.56 per cent on Friday to close 28 cents higher at $2.08. Patrick shares were one cent higher at $6.15.
On January 19, Virgin Blue shares fell to a low of $1.60 after it said net profit for the year to March 31 would be 10-15 per cent down on the previous year.
The Virgin Group spokeswoman said Sir Richard retained full confidence in Virgin Blue and the airline was still performing extremely well.
DJ737
The Roo Rooter
Billionaire Sir Richard Branson's Virgin Group today rejected a takeover offer by ports operator Patrick Corp for budget airline Virgin Blue as too low.
Patrick Corp, which already holds 45.95 per cent of Virgin Blue, launched a surprise $1.90-per-share bid for all the ordinary shares in Virgin Blue that it does not already own, on Friday last week.
Patrick Corp's offer values the airline at $1.99 billion.
The Virgin Group said in a statement today that its Swiss subsidiary, investment vehicle Cricket SA, had acquired 5.1 million more Virgin Blue shares on-market on Friday at an average price of $2.04.
Virgin Group said it had paid $10.1 million in total and now had a 25.1 per cent stake in Virgin Blue.
"As a 25.1 per cent shareholder, it is Virgin Group's view that Virgin Blue Holdings has much greater value than that indicated in the price being offered by Patrick Corp," the group said.
"The airline has been a remarkable success in the Australian market, building a strong reputation for outstanding customer service at a competitive price, whilst maintaining low operational costs."
Virgin Group said it continued to support Virgin Blue, its growth prospects and future expansion plans.
"I am extremely proud of the Virgin Blue business and the great team of people who have brought real competition, genuine value and friendly air travel to the Australian people," Sir Richard said.
A Virgin Group spokesperson said the Patrick bid had come as "quite a surprise".
"It's still very early days. Over the next couple of weeks, we'll be working out the next steps and we'll go from there," she said.
Asked if the Virgin Group intended to further increase its stake, the spokesperson said: "We have no comment on exactly what our next steps will be in that area."
Patrick Corp said on Friday that its off-market offer, which is being made through its wholly-owned subsidiary, Plzen Pty Ltd, realised "full" value for Virgin Blue shares.
Patrick said the bid price represented a 13 per cent premium to Virgin Blue's January 24 closing price of $1.68.
Patrick chief executive Chris Corrigan said the offer was important to Patrick shareholders because it would allow the company to take a clear majority stake in Virgin Blue.
Market analysts think it highly unlikely that Patrick wants 100 per cent of Virgin Blue.
Analysts say that Patrick, which gathers about 14 per cent of its underlying earnings from its Virgin Blue investment, is probably seeking greater influence over the airline's operations and strategic direction.
Virgin Blue shares soared 15.56 per cent on Friday to close 28 cents higher at $2.08. Patrick shares were one cent higher at $6.15.
On January 19, Virgin Blue shares fell to a low of $1.60 after it said net profit for the year to March 31 would be 10-15 per cent down on the previous year.
The Virgin Group spokeswoman said Sir Richard retained full confidence in Virgin Blue and the airline was still performing extremely well.
DJ737
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No real surprise here......Just like buying a house, you put in an offer way below and start from there. As the commentators said, I dont think Corigan really expected to get it at 1.90. Besides he is not after a full take over, just enough to get over that 50% line. And once it goes up a little there will be enough mums and das who will gladly give it up and then Corigan can move in and make the changes as already discussed on this thread. Which I actually think are pretty spot on.
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I still think there is a chance of VB introducing another class. It still fits with user pays. I think it would be W class (Premium Economy) rather than J class. It would only need to be the first two or three rows and charged for accordingly.
My thoughts are there are plenty that would pay the extra which is proven with the lounges.
This is away from the "model" but to be honest Australia is different to Europe and the States as there is nowhere the same competition here which allows for a different model. The LCC+ with extras that are user pays. It fits this country and blindly sticking to a model that works well in a different arena of competition won't work forever. Do this and you cover both ends of the market.
My thoughts are there are plenty that would pay the extra which is proven with the lounges.
This is away from the "model" but to be honest Australia is different to Europe and the States as there is nowhere the same competition here which allows for a different model. The LCC+ with extras that are user pays. It fits this country and blindly sticking to a model that works well in a different arena of competition won't work forever. Do this and you cover both ends of the market.
Maybe this will work without flying J class seats around when not needed :
Have a premium econony fare pitched at about 15% above the current fully flex fares (An extra $38 on the current FF MEL-SYD Fare)
Seats in the 1st four rows with middle seat blocked (loss of 8 seats per sector) peak hour flights only.
A complementary pick of the a'la carte menu up to the value of about $12-$15.
......and a basic (fly 10 get 1 free) FF scheme for top fare payers only...sort of like Impulse had.
Just a thought.
DJ737
The Roo Rooter
Have a premium econony fare pitched at about 15% above the current fully flex fares (An extra $38 on the current FF MEL-SYD Fare)
Seats in the 1st four rows with middle seat blocked (loss of 8 seats per sector) peak hour flights only.
A complementary pick of the a'la carte menu up to the value of about $12-$15.
......and a basic (fly 10 get 1 free) FF scheme for top fare payers only...sort of like Impulse had.
Just a thought.
DJ737
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Its always amazing to see the rumours flying around, especially when there is so much going on in the Australian Aviation arena.
All you have to do is read between the lines and its all quite obvious.
Question: Why has the SQ debate over fly through all of a sudden resurfaced?
Answer: So the slots and preferential rights dont go to an Australian operator ie: Virgin Pacific.
Question: Why does Patricks want the Board control?
Answer: Its got nothing to do with the share price, its got to do with management:
1. Corigin didnt want to float, but BG did.
2. Corigin wanted to consolidate, BG wanted to expand and it has not worked.
3. BG wanted on time performance published, be careful what you wish for.
4. In a nut shell the current VB management are obviously out of their leage.
On the issue of EMB145's, this is on the go. If you look at REX(Singaporean owned) or Skywest(also Singaporean owned), someone needs to beat them to the punch, and VB has expanded and needs a proper feed into their domestic carrier which in turns feeds their international network.
Its not rocket science, the wheel cannot be reinvented.
All you have to do is read between the lines and its all quite obvious.
Question: Why has the SQ debate over fly through all of a sudden resurfaced?
Answer: So the slots and preferential rights dont go to an Australian operator ie: Virgin Pacific.
Question: Why does Patricks want the Board control?
Answer: Its got nothing to do with the share price, its got to do with management:
1. Corigin didnt want to float, but BG did.
2. Corigin wanted to consolidate, BG wanted to expand and it has not worked.
3. BG wanted on time performance published, be careful what you wish for.
4. In a nut shell the current VB management are obviously out of their leage.
On the issue of EMB145's, this is on the go. If you look at REX(Singaporean owned) or Skywest(also Singaporean owned), someone needs to beat them to the punch, and VB has expanded and needs a proper feed into their domestic carrier which in turns feeds their international network.
Its not rocket science, the wheel cannot be reinvented.
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Sun 'Business Telegraph' (London)
Branson to fight £470m takeover of Virgin Blue
By Edward Simpkins (Filed: 30/01/2005)
Virgin Group will tomorrow attempt to fight off a A$1.1bn (£470m) hostile cash takeover bid for Virgin Blue, the low-cost Australian airline which it founded five years ago.
Virgin, led by Sir Richard Branson, is expected to say that the hostile offer from Patrick Corp, Australia's biggest ports operator, which already has a 45 per cent stake in Virgin Blue, significantly undervalues the airline.
As part of its defence Virgin will reveal that it spent more than A$10m on Friday buying about 5m shares in the airline. The acquisition raised Virgin's stake to above 25 per cent and was designed to mop up loose shares in the market.
The purchase at above A$2 per share was also intended to demonstrate Virgin's belief that the company is worth significantly more than the A$1.90 per share offered by Patrick Corp.
Patrick Corp was invited to take a stake in Virgin Blue by Branson in 2002 – two years after the airline's launch and before it was floated on the Australian stock market in 2003.
The Australian ports operator made the hostile offer last week – without consulting Branson – after the Virgin Blue share price dived following a profits warning.
"We think this offer is opportunistic and seriously undervalues the company," an executive familiar with Virgin's position said yesterday. He pointed out that research released by Credit Suisse First Boston, the investment bank, late on Friday valued the company at A$2.35 per share.
An executive close to the situation said he understood that Patrick Corp held discussions with Singapore Airlines (SIA) before making its offer. SIA is keen to get rights to fly on to the US from Australia when it takes delivery of its A380 superjumbos early next year. (Wirraway' bold)
=============================================
Branson to fight £470m takeover of Virgin Blue
By Edward Simpkins (Filed: 30/01/2005)
Virgin Group will tomorrow attempt to fight off a A$1.1bn (£470m) hostile cash takeover bid for Virgin Blue, the low-cost Australian airline which it founded five years ago.
Virgin, led by Sir Richard Branson, is expected to say that the hostile offer from Patrick Corp, Australia's biggest ports operator, which already has a 45 per cent stake in Virgin Blue, significantly undervalues the airline.
As part of its defence Virgin will reveal that it spent more than A$10m on Friday buying about 5m shares in the airline. The acquisition raised Virgin's stake to above 25 per cent and was designed to mop up loose shares in the market.
The purchase at above A$2 per share was also intended to demonstrate Virgin's belief that the company is worth significantly more than the A$1.90 per share offered by Patrick Corp.
Patrick Corp was invited to take a stake in Virgin Blue by Branson in 2002 – two years after the airline's launch and before it was floated on the Australian stock market in 2003.
The Australian ports operator made the hostile offer last week – without consulting Branson – after the Virgin Blue share price dived following a profits warning.
"We think this offer is opportunistic and seriously undervalues the company," an executive familiar with Virgin's position said yesterday. He pointed out that research released by Credit Suisse First Boston, the investment bank, late on Friday valued the company at A$2.35 per share.
An executive close to the situation said he understood that Patrick Corp held discussions with Singapore Airlines (SIA) before making its offer. SIA is keen to get rights to fly on to the US from Australia when it takes delivery of its A380 superjumbos early next year. (Wirraway' bold)
=============================================
Moderate, Modest & Mild.
Shades of the hostile takeover of Ansett, from Sir Reg, by those two @
es, Abeles & Murdoch!
As a matter of interest, does anyone know whether B.G.'s shares went to one buyer (Patricks?) or were they just thrown to the wolves?
es, Abeles & Murdoch!As a matter of interest, does anyone know whether B.G.'s shares went to one buyer (Patricks?) or were they just thrown to the wolves?
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Mon "Melbourne Age"
Branson counterattacks Patrick bid
By Scott Rochfort
Sydney
January 31, 2005
Sir Richard's privately owned Virgin Group announced it had bought 5.1 million shares in Virgin Blue on the same day Patrick made its $1.90-a-share offer, taking the billionaire's stake from 24.6 per cent to 25.1.
Virgin Blue shares have already climbed above Patrick's offer on Friday, rising from $1.80 to $2.08, with Virgin Group declaring the airline "has much greater value than that indicated in the price being offered by Patrick Corporation".
But the Virgin founder remained vague on whether he intended to keep his stake if Patrick produced a higher bid.
"I am extremely proud of the Virgin Blue business and the great team of people who have brought real competition . . . to the Australian people," he said in a statement.
Patrick spokesman Paul White said: "We're unsure of Virgin Group's objectives."
Citing the restrictions that prevent substantial shareholders increasing their shareholdings by more than 3 per cent every six months unless they make a full takeover bid, Mr White said: "Patrick is offering to buy all of the shares that it currently doesn't own in Virgin Blue, which makes us the only realistic bidder."
Patrick says the $1.90-a-share offer "realises full value" given that it values Virgin Blue at a 13 per cent premium to its closing price of $1.80 a share on Thursday night.
Yet most analysts have labelled Patrick's bid as opportunistic, given it comes a little over a week after Virgin Blue issued its second profit warning this fiscal year.
The airline's shares were trading around $2 prior to the warning. Credit Suisse First Boston, which co-managed the Virgin Blue float, has a valuation of $2.35.
Analysts believe Patrick's bid is not designed to give the transport group full ownership of Virgin Blue but rather, lift Patrick's 45.4 per cent stake above 50 per cent to give it control of the board and the airline's direction.
Amid rumours in recent months of Mr Corrigan's disapproval of some members of the airline's management team, the Patrick Bidder's Statement said the transport group intended to "work with Virgin management to determine how best to further develop Virgin Blue's business, reduce operating costs, and otherwise maximise the operating performance".
It is unclear if this will affect Virgin Blue's plans to start up a low-cost airline in Macau or the airline's plans to establish a carrier that could service the Australia-US route.
Goldman Sachs JBWere said the takeover bid "signals that Patrick is concerned that Virgin Blue may dilute the value of its domestic franchise (via) expansion into offshore aviation markets or new business ventures."
Virgin Blue chief executive Brett Godfrey has kept silent since the bid, fuelling speculation he would leave the airline.
Yet Patrick said it planned to "continue the employment of Virgin Blue's present employees" and not to "make any major changes" if it gains control of the airline.
Patrick's own share price has taken a battering from the two recent Virgin Blue downgrades, giving Mr Corrigan more reason to gain board control.
After hitting an all-time high of $6.88 before the Virgin Blue downgrade, Patrick shares last traded at $6.15.
===========================================
Mon "Melbourne Age"
Singapore has \'no plans\' for Virgin Blue
By Scott Rochfort
Sydney
January 31, 2005
Singapore Airlines has dismissed speculation it will play any role in Patrick Corporation\'s $1.1 billion bid for Virgin Blue Holdings.
After scuttling plans to enter the Australian domestic market, Qantas\' vocal overseas opponent said it had no plans to buy into Virgin Blue.
Highlighting the recent sale of its remaining 6.3 per cent stake in Air New Zealand as an example, the airline said it no longer had an interest in investing in non-core businesses.
"At this stage, Singapore has no intention or no plans to purchase any part of Virgin Blue," airline spokeswoman Samantha Stewart said.
"It\'s an interesting development. We\'re watching it very closely," she said.
A report in London\'s The Daily Telegraph said Patrick held talks with Singapore before making the offer. It is unclear what possible deal could be struck between Singapore and Virgin Blue (or Patrick), despite one source close to Patrick labelling the media report as "bull****".
One theory suggests Patrick could be keen to sound out the long-term risks of Virgin Blue\'s tentative plans to establish an airline to fly the lucrative Australia-US route.
The possibility of Singapore entering the route if it gains approval from the Australian Government could seriously hurt the profitability of the route, which is only serviced by Qantas and United Airlines.
There is speculation talks between Patrick and Singapore would focus on the airline establishing an "interline" agreement with Virgin Blue.
Such a deal with Singapore - the foreign airline with the most flights into Australia - would give Virgin Blue a handy slice of inbound international feed traffic, which makes up around one-sixth of the domestic market.
A stumbling block is Virgin Blue\'s rudimentary IT system, which restricts the airline\'s IT and booking systems from linking up with the systems of international airlines.
As for capturing a larger slice of the higher-yielding corporate market, Virgin Blue is reportedly close to finalising plans for its own frequent-flyer scheme.
It is unclear if Virgin Blue has any plans to link its frequent-flyer scheme with any international airlines, such as its so-called sister carrier, Virgin Atlantic.
==========================================
Mon "The Australian"
Branson rejects Corrigan bid
Andrew Trounson
January 31, 2005
BRITISH billionaire Richard Branson is not about to stand by and let his mate Chris Corrigan buy on the cheap a greater slice of their Virgin Blue airline without a fight, yesterday dismissing Patrick Corporation\'s $1.1 billion bid as too low.
Sir Richard has put his money where his mouth is, raising his own stake in the cut-price airline by another half a percentage point to 25.1 per cent.
Sir Richard\'s Virgin Group paid $10.1 million to snap up 5.1 million Virgin Blue shares on Friday, the same day Mr Corrigan\'s transport giant Patrick launched its $1.90-a-share offer.
Sir Richard paid an average $2.04 a share and his move will lend support to Virgin Blue shares which on Friday soared 16 per cent to $2.08 on the news of Patrick\'s bid.
"It is Virgin Group\'s view that Virgin Blue Holdings has much greater value than that indicated in the price being offered by Patrick Corp," Virgin Group said in a statement.
"The airline has been a remarkable success in the Australian market, building a strong reputation for outstanding customer service at a competitive price whilst maintaining low operational costs."
But Sir Richard has a job ahead of him if he is to stop Patrick taking 50 per cent-plus control of Virgin Blue, which is managed by a confidant of Sir Richard, Brett Godfrey.
Without itself launching a rival full takeover bid, Virgin Group is limited by Australia\'s "creep" provisions to buying no more than an additional 3 per cent of Virgin Blue every six months.
Patrick already has 45.95 per cent and Mr Corrigan appears to be only bidding what he thinks will be enough to take him over 50 per cent.
The bid has sparked speculation that in the face of new discount competition from Qantas offshoot Jetstar, Mr Corrigan is concerned Virgin Blue has expanded too aggressively, despite its success in moving fast to fill the void left by the collapse of Ansett. Virgin Blue now has about a third of the domestic market.
However, Patrick already has de facto control of the eight-member Virgin Blue board with three appointees and a Patrick-appointed independent in David Mortimer.
The Virgin Blue board is to meet on Wednesday in Brisbane when Mr Godfrey is expected to present new business initiatives. High on the agenda for Virgin Blue is taking on Qantas by grabbing a greater slice of the corporate market. There are strong rumours Virgin Blue is planning to launch a frequent flyer scheme later this year.
For now the market is telling Mr Corrigan that if he wants more he will need to pay more. Certainly, those shareholders who paid $2.25 a share to climb aboard when co-founders Patrick and Virgin floated the company in 2003 will be unimpressed by the offer.
"The fact that Virgin Group has been buying on market – and given the current trading price – indicates that they are unlikely to get control," BT Group portfolio manager Misha Collins said.
In a statement, Sir Richard said: "I am extremely proud of the Virgin Blue business and the great team of people who have brought real competition, genuine value and friendly air travel to the Australian people."
A Patrick spokesman said: "We are unsure of Virgin Group\'s objectives as they are only entitled to buy a further 3 per cent of the company."
===========================================
Branson counterattacks Patrick bid
By Scott Rochfort
Sydney
January 31, 2005
Sir Richard's privately owned Virgin Group announced it had bought 5.1 million shares in Virgin Blue on the same day Patrick made its $1.90-a-share offer, taking the billionaire's stake from 24.6 per cent to 25.1.
Virgin Blue shares have already climbed above Patrick's offer on Friday, rising from $1.80 to $2.08, with Virgin Group declaring the airline "has much greater value than that indicated in the price being offered by Patrick Corporation".
But the Virgin founder remained vague on whether he intended to keep his stake if Patrick produced a higher bid.
"I am extremely proud of the Virgin Blue business and the great team of people who have brought real competition . . . to the Australian people," he said in a statement.
Patrick spokesman Paul White said: "We're unsure of Virgin Group's objectives."
Citing the restrictions that prevent substantial shareholders increasing their shareholdings by more than 3 per cent every six months unless they make a full takeover bid, Mr White said: "Patrick is offering to buy all of the shares that it currently doesn't own in Virgin Blue, which makes us the only realistic bidder."
Patrick says the $1.90-a-share offer "realises full value" given that it values Virgin Blue at a 13 per cent premium to its closing price of $1.80 a share on Thursday night.
Yet most analysts have labelled Patrick's bid as opportunistic, given it comes a little over a week after Virgin Blue issued its second profit warning this fiscal year.
The airline's shares were trading around $2 prior to the warning. Credit Suisse First Boston, which co-managed the Virgin Blue float, has a valuation of $2.35.
Analysts believe Patrick's bid is not designed to give the transport group full ownership of Virgin Blue but rather, lift Patrick's 45.4 per cent stake above 50 per cent to give it control of the board and the airline's direction.
Amid rumours in recent months of Mr Corrigan's disapproval of some members of the airline's management team, the Patrick Bidder's Statement said the transport group intended to "work with Virgin management to determine how best to further develop Virgin Blue's business, reduce operating costs, and otherwise maximise the operating performance".
It is unclear if this will affect Virgin Blue's plans to start up a low-cost airline in Macau or the airline's plans to establish a carrier that could service the Australia-US route.
Goldman Sachs JBWere said the takeover bid "signals that Patrick is concerned that Virgin Blue may dilute the value of its domestic franchise (via) expansion into offshore aviation markets or new business ventures."
Virgin Blue chief executive Brett Godfrey has kept silent since the bid, fuelling speculation he would leave the airline.
Yet Patrick said it planned to "continue the employment of Virgin Blue's present employees" and not to "make any major changes" if it gains control of the airline.
Patrick's own share price has taken a battering from the two recent Virgin Blue downgrades, giving Mr Corrigan more reason to gain board control.
After hitting an all-time high of $6.88 before the Virgin Blue downgrade, Patrick shares last traded at $6.15.
===========================================
Mon "Melbourne Age"
Singapore has \'no plans\' for Virgin Blue
By Scott Rochfort
Sydney
January 31, 2005
Singapore Airlines has dismissed speculation it will play any role in Patrick Corporation\'s $1.1 billion bid for Virgin Blue Holdings.
After scuttling plans to enter the Australian domestic market, Qantas\' vocal overseas opponent said it had no plans to buy into Virgin Blue.
Highlighting the recent sale of its remaining 6.3 per cent stake in Air New Zealand as an example, the airline said it no longer had an interest in investing in non-core businesses.
"At this stage, Singapore has no intention or no plans to purchase any part of Virgin Blue," airline spokeswoman Samantha Stewart said.
"It\'s an interesting development. We\'re watching it very closely," she said.
A report in London\'s The Daily Telegraph said Patrick held talks with Singapore before making the offer. It is unclear what possible deal could be struck between Singapore and Virgin Blue (or Patrick), despite one source close to Patrick labelling the media report as "bull****".
One theory suggests Patrick could be keen to sound out the long-term risks of Virgin Blue\'s tentative plans to establish an airline to fly the lucrative Australia-US route.
The possibility of Singapore entering the route if it gains approval from the Australian Government could seriously hurt the profitability of the route, which is only serviced by Qantas and United Airlines.
There is speculation talks between Patrick and Singapore would focus on the airline establishing an "interline" agreement with Virgin Blue.
Such a deal with Singapore - the foreign airline with the most flights into Australia - would give Virgin Blue a handy slice of inbound international feed traffic, which makes up around one-sixth of the domestic market.
A stumbling block is Virgin Blue\'s rudimentary IT system, which restricts the airline\'s IT and booking systems from linking up with the systems of international airlines.
As for capturing a larger slice of the higher-yielding corporate market, Virgin Blue is reportedly close to finalising plans for its own frequent-flyer scheme.
It is unclear if Virgin Blue has any plans to link its frequent-flyer scheme with any international airlines, such as its so-called sister carrier, Virgin Atlantic.
==========================================
Mon "The Australian"
Branson rejects Corrigan bid
Andrew Trounson
January 31, 2005
BRITISH billionaire Richard Branson is not about to stand by and let his mate Chris Corrigan buy on the cheap a greater slice of their Virgin Blue airline without a fight, yesterday dismissing Patrick Corporation\'s $1.1 billion bid as too low.
Sir Richard has put his money where his mouth is, raising his own stake in the cut-price airline by another half a percentage point to 25.1 per cent.
Sir Richard\'s Virgin Group paid $10.1 million to snap up 5.1 million Virgin Blue shares on Friday, the same day Mr Corrigan\'s transport giant Patrick launched its $1.90-a-share offer.
Sir Richard paid an average $2.04 a share and his move will lend support to Virgin Blue shares which on Friday soared 16 per cent to $2.08 on the news of Patrick\'s bid.
"It is Virgin Group\'s view that Virgin Blue Holdings has much greater value than that indicated in the price being offered by Patrick Corp," Virgin Group said in a statement.
"The airline has been a remarkable success in the Australian market, building a strong reputation for outstanding customer service at a competitive price whilst maintaining low operational costs."
But Sir Richard has a job ahead of him if he is to stop Patrick taking 50 per cent-plus control of Virgin Blue, which is managed by a confidant of Sir Richard, Brett Godfrey.
Without itself launching a rival full takeover bid, Virgin Group is limited by Australia\'s "creep" provisions to buying no more than an additional 3 per cent of Virgin Blue every six months.
Patrick already has 45.95 per cent and Mr Corrigan appears to be only bidding what he thinks will be enough to take him over 50 per cent.
The bid has sparked speculation that in the face of new discount competition from Qantas offshoot Jetstar, Mr Corrigan is concerned Virgin Blue has expanded too aggressively, despite its success in moving fast to fill the void left by the collapse of Ansett. Virgin Blue now has about a third of the domestic market.
However, Patrick already has de facto control of the eight-member Virgin Blue board with three appointees and a Patrick-appointed independent in David Mortimer.
The Virgin Blue board is to meet on Wednesday in Brisbane when Mr Godfrey is expected to present new business initiatives. High on the agenda for Virgin Blue is taking on Qantas by grabbing a greater slice of the corporate market. There are strong rumours Virgin Blue is planning to launch a frequent flyer scheme later this year.
For now the market is telling Mr Corrigan that if he wants more he will need to pay more. Certainly, those shareholders who paid $2.25 a share to climb aboard when co-founders Patrick and Virgin floated the company in 2003 will be unimpressed by the offer.
"The fact that Virgin Group has been buying on market – and given the current trading price – indicates that they are unlikely to get control," BT Group portfolio manager Misha Collins said.
In a statement, Sir Richard said: "I am extremely proud of the Virgin Blue business and the great team of people who have brought real competition, genuine value and friendly air travel to the Australian people."
A Patrick spokesman said: "We are unsure of Virgin Group\'s objectives as they are only entitled to buy a further 3 per cent of the company."
===========================================
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an interesting news artical from my brokers website.
ASX RELEASE
31 January 2005
RELEASE
Virgin Blue Holdings Limited
Patrick Corporation Takeover Offer
On 28 January Plzen Pty Limited (a subsidiary of Patrick Corporation Limited) announced an intention
to make a takeover offer for all of the shares in Virgin Blue that it does not already own. After the market
closed on the same date, Plzen lodged its bidders statement with Virgin Blue.
Virgin Blue has been notified by Cricket SA (a Virgin Group company) that on 28 January 2005 it had
acquired additional Virgin Blue shares on the ASX at various prices, but with the highest price being
$2.06 per share.
Based on legal advice, Virgin Blue believes it may be possible that Cricket's acquisitions could trigger
the application of section 621(3) of the Corporations Act. That rule requires takeover offers to be at a
price which equals or exceeds the maximum consideration that the bidder or an associate of the bidder
provided or agreed to provide in the four months before the date of the bid.
Patrick Corporation has advised Virgin Blue that it believes that the section does not apply and is seeking
confirmation as to its views from ASIC and if necessary the Takeovers Panel.
Virgin Blue will make a further announcement when it has received further advice or there are further
developments as to the implications of these acquisitions for the Plzen takeover bid.
Virgin Blue reiterates its advice to shareholders given on 28 January that pending detailed
consideration of the takeover offer, Virgin Blue advises shareholders to do nothing at this stage.
For further information:
Public and media
Heather Jeffery Public relations and Media Manger, Virgin Blue -ph: 0417 363 121
Investors
Keith Neate Chief Financial Officer, Virgin Blue -ph: 07 3295 5046
--------------------------------------------------
t
an ASIC form 604. Notice of change of interests of substantial holder in relation to ordinary shares of Virgin Blue Holding (asx code VBA)
ASX RELEASE
31 January 2005
RELEASE
Virgin Blue Holdings Limited
Patrick Corporation Takeover Offer
On 28 January Plzen Pty Limited (a subsidiary of Patrick Corporation Limited) announced an intention
to make a takeover offer for all of the shares in Virgin Blue that it does not already own. After the market
closed on the same date, Plzen lodged its bidders statement with Virgin Blue.
Virgin Blue has been notified by Cricket SA (a Virgin Group company) that on 28 January 2005 it had
acquired additional Virgin Blue shares on the ASX at various prices, but with the highest price being
$2.06 per share.
Based on legal advice, Virgin Blue believes it may be possible that Cricket's acquisitions could trigger
the application of section 621(3) of the Corporations Act. That rule requires takeover offers to be at a
price which equals or exceeds the maximum consideration that the bidder or an associate of the bidder
provided or agreed to provide in the four months before the date of the bid.
Patrick Corporation has advised Virgin Blue that it believes that the section does not apply and is seeking
confirmation as to its views from ASIC and if necessary the Takeovers Panel.
Virgin Blue will make a further announcement when it has received further advice or there are further
developments as to the implications of these acquisitions for the Plzen takeover bid.
Virgin Blue reiterates its advice to shareholders given on 28 January that pending detailed
consideration of the takeover offer, Virgin Blue advises shareholders to do nothing at this stage.
For further information:
Public and media
Heather Jeffery Public relations and Media Manger, Virgin Blue -ph: 0417 363 121
Investors
Keith Neate Chief Financial Officer, Virgin Blue -ph: 07 3295 5046
--------------------------------------------------
t
an ASIC form 604. Notice of change of interests of substantial holder in relation to ordinary shares of Virgin Blue Holding (asx code VBA)
Last edited by Ultralights; 31st Jan 2005 at 07:00.
