APA Bid fails to get 50% (Merged)
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Royal Doulton
This whole deal has the smell of a dead cat thats been sitting out in the hot sun for 2 weeks.
Imagine our founding fathers looking down on this deal ( Hudson -Fysh et al).
Notice in all the diatribe thats been written and speculated over .....the two most important elements in Qantas almost fail to even get a sentence or by-line ,ie.
THE CUSTOMER.
THE STAFF MEMBER.
The longer this deal drags on the longer the above 2 groups will distance themselves from the Rat.
There is a giant turd sitting in the bowl..... we need a good flush out !!!
Imagine our founding fathers looking down on this deal ( Hudson -Fysh et al).
Notice in all the diatribe thats been written and speculated over .....the two most important elements in Qantas almost fail to even get a sentence or by-line ,ie.
THE CUSTOMER.
THE STAFF MEMBER.
The longer this deal drags on the longer the above 2 groups will distance themselves from the Rat.
There is a giant turd sitting in the bowl..... we need a good flush out !!!
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Originally Posted by wingspar
What Qantas needs are owners who genuinely support the airline!
Found this Ansett ad last night. Notice anyone?
http://www.youtube.com/watch?v=jMXQXmeqepo
Found this Ansett ad last night. Notice anyone?
http://www.youtube.com/watch?v=jMXQXmeqepo
N
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Thanks for the reply Swingwing. I can see what you're saying makes a lot of sense for shares that will be acquired within the next 2 weeks. But what I don't understand is what difference it makes for shares the hedge funds already own.
Say, for example, you bought shares last week at $5.38. What difference does it make whether you accept the offer before 7pm Fri 4th, or on Fri 18th. You still make the same profit of 7c and get paid at exactly the same time, if the bid goes unconditional. What is the advantage of waiting the extra 2 weeks on shares you already own rather than accepting immediately and risking APA falling short of 50%?
Cheers
Say, for example, you bought shares last week at $5.38. What difference does it make whether you accept the offer before 7pm Fri 4th, or on Fri 18th. You still make the same profit of 7c and get paid at exactly the same time, if the bid goes unconditional. What is the advantage of waiting the extra 2 weeks on shares you already own rather than accepting immediately and risking APA falling short of 50%?
Cheers
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'holic - my mistake, I misunderstood what you were asking.
What you say would make sense if you were talking about a fund manager that was investing in a conventional way (picking stocks based on dividend stream, long term value, index weight, P/E or some other metric. The standard managed fund (BT, Colonial etc) that you might invest in uses this sort of approach. Indeed, in the case of super funds (for example) the fund managers are governed by rules set by trustees which limit the criteria used to select investments. They constantly adjust their positions by buying and selling, but in most cases their aim is to make money by holding a valuable stock for the medium term.
Hedge funds don't usually operate in this sort of conventional way. In this case the funds haven't simply taken a position in Qantas and then put the shares in the drawer until it's time to accept. They are constantly and actively trading a proportion of the stock they hold every day - looking for opportunities to make a cent or two here and there. You can see this here:
http://www.asx.com.au/asx/research/C...de=QAN#details
Look at the 2nd of May (Wednesday). There were nearly 64 million shares traded in a range of $5.30 to $5.35 - and remember for each seller there has to be a buyer. The market was still highly liquid as funds moved in and out of positions. They would each have been aiming for a particular weight in the stock, and each would have had a slightly different view as to the trading range and profits to be made. As Direct Anywhere said above, they don't just want to send in an acceptance and stop the party early, so they keep trading and stay liquid right up until the last minute.
Your confusion is understandable - in this case the funds have no interest in long term value based investing, which is why the position reached last night (assuming the buyout doesn't proceed) is bad news - the airline's share register is now at the mercy of these people.
Hope that helps.
SW
what I don't understand is what difference it makes for shares the hedge funds already own.
Hedge funds don't usually operate in this sort of conventional way. In this case the funds haven't simply taken a position in Qantas and then put the shares in the drawer until it's time to accept. They are constantly and actively trading a proportion of the stock they hold every day - looking for opportunities to make a cent or two here and there. You can see this here:
http://www.asx.com.au/asx/research/C...de=QAN#details
Look at the 2nd of May (Wednesday). There were nearly 64 million shares traded in a range of $5.30 to $5.35 - and remember for each seller there has to be a buyer. The market was still highly liquid as funds moved in and out of positions. They would each have been aiming for a particular weight in the stock, and each would have had a slightly different view as to the trading range and profits to be made. As Direct Anywhere said above, they don't just want to send in an acceptance and stop the party early, so they keep trading and stay liquid right up until the last minute.
Your confusion is understandable - in this case the funds have no interest in long term value based investing, which is why the position reached last night (assuming the buyout doesn't proceed) is bad news - the airline's share register is now at the mercy of these people.
Hope that helps.
SW
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Quote of the week
One Geoffrey Dixon as reported in The Australian:
Yes, just like spoiled little children who are suddenly denied access to the hitherto accessible lolly jar. The poor bastards!!
On another line, one wonders what kind of side deal has been done between APA and the investor who helped them nudge 50%? This bloke is alleged own 11% of Qantas so why didn't he sell all of his investment, and if any sweet-heart deal has been done, will it be extended to all of the so-called recalcitrant shareholders?.
Qantas chief executive Geoff Dixon admitted on Friday night that the apparent failure of the bid would unsettle Qantas management.
On another line, one wonders what kind of side deal has been done between APA and the investor who helped them nudge 50%? This bloke is alleged own 11% of Qantas so why didn't he sell all of his investment, and if any sweet-heart deal has been done, will it be extended to all of the so-called recalcitrant shareholders?.
The APA now have over 50% with a late offer of shares after the 7pm deadline.
If this can be treated similar to an after market trade on the ASX it is a
done deal.
If this can be treated similar to an after market trade on the ASX it is a
done deal.
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From ABC News (abc.net.au)
Qantas to tell ASX takeover will go ahead
Qantas is due to make a statement to the Australian Securities Exchange on Monday about the takeover offer from Airline Partners Australia.
The consortium announced this morning it plans to go ahead with the bid, after an acceptance from a major American investor.
The acceptance came after the deadline last night and gave the consortium the required level of support.
The consortium now intends to seek approval from the Takeovers Panel to proceed to the next stage.
It is understood the panel can take up to two weeks to deal with such applications.
Qantas says it is confident the various businesses in the Qantas group will continue to operate in a highly professional manner.
Airline Analyst Fabian Babich from BBY says the key issue for shareholders is to wait for a decision from the Takeovers Panel.
"Now we understand that the panel has been convened on an emergency basis over the weekend and we would imagine that they'll be working hard to try and arrive at a decision on prior to the opening of market on Monday morning," he said.
"If they don't reach a decision on Monday morning, our view would be that the stock exchange would likely introduce a suspension of trading of Qantas shares because the situation at the moment is an imbalanced information one as far as shareholders go.
"In other words, they really don't know the full details of the takeover bid.
Qantas is due to make a statement to the Australian Securities Exchange on Monday about the takeover offer from Airline Partners Australia.
The consortium announced this morning it plans to go ahead with the bid, after an acceptance from a major American investor.
The acceptance came after the deadline last night and gave the consortium the required level of support.
The consortium now intends to seek approval from the Takeovers Panel to proceed to the next stage.
It is understood the panel can take up to two weeks to deal with such applications.
Qantas says it is confident the various businesses in the Qantas group will continue to operate in a highly professional manner.
Airline Analyst Fabian Babich from BBY says the key issue for shareholders is to wait for a decision from the Takeovers Panel.
"Now we understand that the panel has been convened on an emergency basis over the weekend and we would imagine that they'll be working hard to try and arrive at a decision on prior to the opening of market on Monday morning," he said.
"If they don't reach a decision on Monday morning, our view would be that the stock exchange would likely introduce a suspension of trading of Qantas shares because the situation at the moment is an imbalanced information one as far as shareholders go.
"In other words, they really don't know the full details of the takeover bid.
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Thanks again Swingwing. I'll have to apologise because I'm a bit of a slow learner when it comes to all things financial.
So if I understand right, what you are saying is that funds who bought, using your example, on Wed May 2 at $5.30-$5.25 rather than committing themselves to APA at $5.45 (which is in no way a certainty) would rather sell prior to the next 2 weeks, presumably at less than $5.45.
Which begs the question, if the hedge funds hold 36% and APA has 46% it would only take a small amount of collusion between them all to get the deal over the line at $5.45. The funds have maximized their profit, APA has Qantas, everyone's a winner (except us).
I've had a few beers, I'm sure this will all be crystal clear in the morning
So if I understand right, what you are saying is that funds who bought, using your example, on Wed May 2 at $5.30-$5.25 rather than committing themselves to APA at $5.45 (which is in no way a certainty) would rather sell prior to the next 2 weeks, presumably at less than $5.45.
Which begs the question, if the hedge funds hold 36% and APA has 46% it would only take a small amount of collusion between them all to get the deal over the line at $5.45. The funds have maximized their profit, APA has Qantas, everyone's a winner (except us).
I've had a few beers, I'm sure this will all be crystal clear in the morning
I think the real acid test is to imagine the actions if the situation were reversed.
Imagine if APA announced that they had 52% at 1900 on Friday. Then a player withdrew his 5% at 1930. Would they then be taking this to the Takeover Panel?
I think not. They would be arguing that a deadline is a deadline, just as they should be doing now.
ruprecht.
Imagine if APA announced that they had 52% at 1900 on Friday. Then a player withdrew his 5% at 1930. Would they then be taking this to the Takeover Panel?
I think not. They would be arguing that a deadline is a deadline, just as they should be doing now.
ruprecht.
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Precedent
This same situation occurred withh Alinta a while ago.
It was taken to the high court...the decision:
............ if the deal was not registered with CHESS before the deadline it was both null and void.ie it was not considered to be valid.
This is a precedent to these circumstances.....the deal is not valid.
Who is going to commence the litigation/challenge to this outrage?
It was taken to the high court...the decision:
............ if the deal was not registered with CHESS before the deadline it was both null and void.ie it was not considered to be valid.
This is a precedent to these circumstances.....the deal is not valid.
Who is going to commence the litigation/challenge to this outrage?
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07-114 ASIC technical relief facilitates final stages of Qantas bid
Thursday 3 May 2007
ASIC last night provided relief to allow the bid by Airline Partners Australia Limited for Qantas Airways Limited to proceed in line with market expectations about the way valid acceptances into the bid can be made.
The relief was needed because of the recent decision in Australian Pipeline Limited v Alinta Limited, which casts doubt on the time at which acceptances must be made to be valid. The bid documents used in the Qantas offer were drafted before that court decision was handed down.
In ASIC’s view, if no relief were granted, there would be a substantial risk that holders of Qantas shares would not be aware of the implications of the Alinta decision for the timing of their lodgement of valid acceptances. That in turn would mean that in the closing stages of the bid target shareholders may not be fully informed about how validly to accept the bid in time.
The relief granted enables the bid to be concluded in line with statements made throughout the course of the bid, and avoids any unintended results of the Alinta decision. It does this by treating an acceptance form received in accordance with the terms of the offer before the close of the bid as a valid acceptance under the bid even if it has not been input into the CHESS system.
Thursday 3 May 2007
ASIC last night provided relief to allow the bid by Airline Partners Australia Limited for Qantas Airways Limited to proceed in line with market expectations about the way valid acceptances into the bid can be made.
The relief was needed because of the recent decision in Australian Pipeline Limited v Alinta Limited, which casts doubt on the time at which acceptances must be made to be valid. The bid documents used in the Qantas offer were drafted before that court decision was handed down.
In ASIC’s view, if no relief were granted, there would be a substantial risk that holders of Qantas shares would not be aware of the implications of the Alinta decision for the timing of their lodgement of valid acceptances. That in turn would mean that in the closing stages of the bid target shareholders may not be fully informed about how validly to accept the bid in time.
The relief granted enables the bid to be concluded in line with statements made throughout the course of the bid, and avoids any unintended results of the Alinta decision. It does this by treating an acceptance form received in accordance with the terms of the offer before the close of the bid as a valid acceptance under the bid even if it has not been input into the CHESS system.
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OK so what happens if the takeover panel gives the green light for a 14 day extension.I assume that the new deadline will be 7pm on the 18th May.
So is that deadline exact or will they appeal against that if they get over 70% sometime next day as well.
Does this mean that the extension is 14 days or is it 15 days or how about 16 days because some retard in the US gives the excuse that they did not know there are other time zones in the world.Perhaps they will want 3 months because of some other excuse they have ready?
The bottom line is that they agreed to and had full knowledge of the deadline and now they want to break it so that it favours them.
I cannot wait to next weeks chasers show as I'm sure they will give this their full attention.
So is that deadline exact or will they appeal against that if they get over 70% sometime next day as well.
Does this mean that the extension is 14 days or is it 15 days or how about 16 days because some retard in the US gives the excuse that they did not know there are other time zones in the world.Perhaps they will want 3 months because of some other excuse they have ready?
The bottom line is that they agreed to and had full knowledge of the deadline and now they want to break it so that it favours them.
I cannot wait to next weeks chasers show as I'm sure they will give this their full attention.
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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.
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.
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It would be completely unconscionable for a quasi-judicial body to seek to overturn this
http://www.takeovers.gov.au/display....ntID=6#members
Mr Simon McKeon, (President) Macquarie Bank Limited Melbourne
Anyone think there might be a conflict of interest...
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I don't think that there will be any legal precedent for the takeover panel to grant APA their wish. To do so, would create a precedent that they might not want to later follow.
Sounds like some greedy US hedge funds were trying to milk every last sent out of the deal and were then caught napping at deadline time. That, or they assumed that hedge funds owned more of Qantas than they actually do, APA would have got past 50%, and they would have had another two weeks to milk some more cash out of the deal. Looks like good old fashion greed has bought these people undone.
For the takeover panel to grant permission for the bid to continue would, as I say, create a legal precedent that they would probably not want to follow in future. If the did grant permission, it would also be open to appeal. Leading to months of uncertaintly for shareholders etc. In my un-educated and un-informed opinion, APA will be told, "sorry boys, close but a deadline is just that" by the takeover panel. They may then go away and lick their wounds before coming back again at a later date. The panel must act in this manner to bring the whole dragged out process to an end.
Dame Margret will have to fall on her sword. It should also be stated the future bidders should also actually buy some shares in the company prior to trying to take it over.Making the bid final so early in the peice was a big mistake on APA's behalf. Gave them no room to woo some of the holdout shareholders that may have been bought for a further ten or twenty cents.Then they would have had 100% control.
Huge cash incentives to board members and senior executives from bidders should also come under close scrutiny in future.
In my opinion, the failure of this bid is a blessing for Qantas as a company. It should now press on and do what it does best. Deliver people to the far reaches in the safest manner possible.
Sounds like some greedy US hedge funds were trying to milk every last sent out of the deal and were then caught napping at deadline time. That, or they assumed that hedge funds owned more of Qantas than they actually do, APA would have got past 50%, and they would have had another two weeks to milk some more cash out of the deal. Looks like good old fashion greed has bought these people undone.
For the takeover panel to grant permission for the bid to continue would, as I say, create a legal precedent that they would probably not want to follow in future. If the did grant permission, it would also be open to appeal. Leading to months of uncertaintly for shareholders etc. In my un-educated and un-informed opinion, APA will be told, "sorry boys, close but a deadline is just that" by the takeover panel. They may then go away and lick their wounds before coming back again at a later date. The panel must act in this manner to bring the whole dragged out process to an end.
Dame Margret will have to fall on her sword. It should also be stated the future bidders should also actually buy some shares in the company prior to trying to take it over.Making the bid final so early in the peice was a big mistake on APA's behalf. Gave them no room to woo some of the holdout shareholders that may have been bought for a further ten or twenty cents.Then they would have had 100% control.
Huge cash incentives to board members and senior executives from bidders should also come under close scrutiny in future.
In my opinion, the failure of this bid is a blessing for Qantas as a company. It should now press on and do what it does best. Deliver people to the far reaches in the safest manner possible.
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Best Practice
Again Qantas will be the subject of Academics in Uni's and Research Journo's as to :
HOW NOT TO BE TAKEN OVER BY A PRIVATE EQUITY COMPANY.
Its again a total failure in Management #101.
Read any Management text book and overlap the Qantas strategy ....the result = an unmitigated FAILURE. ie:Post 1992.
As you read thru the Chapter headings -just think thru the examples of inepititude that have taken place. I won't write them in-I'll let you fill in the blanks.
Why is this so?
When so many talented people come into Qantas with the dream of making a difference and being proud to work for an Aussie icon ( pardon the jingoism) ......only to have all that ripped out of them to the point that you do the bare minimum due to nil recognition and lack of any respect for management.
What puzzles me though is , imagine what our profit figures would be IF we had some positives linked to the above 20 points. Granted a $1b pretax profit ain't half bad......BUT.......what if??????
I just saw Costello on the Sunday program declare that the Takeovers Tribunal panel was set up by him. He said that if the actions on Friday night were deemed by the Tribunal to be "UNSATISFACTORY" then the Tribunal will need to make the appropriate decision.
Ok then we'll see if this becomes yet another topic for the Academic's to put in their research papers:
WHEN....... NO MEANS NO!
HOW NOT TO BE TAKEN OVER BY A PRIVATE EQUITY COMPANY.
Its again a total failure in Management #101.
Read any Management text book and overlap the Qantas strategy ....the result = an unmitigated FAILURE. ie:Post 1992.
As you read thru the Chapter headings -just think thru the examples of inepititude that have taken place. I won't write them in-I'll let you fill in the blanks.
- Act Strategically---------------
- Make sound decisions----------
- Leverage innovation-----------
- Manage Globally-----------
- Engage and inspire its people---------
- Build Talent-----------
- Promote collaboration & teamwork----------
- Foster open communication-----------
- Manage conflict-------------
- Increase cultural competence------------
- Focus on customers-------------
- Manage and improve process--------------
- Manage Change---------
- Lead courageously-------------
- Establish trust---------------
- Show adapatability-----------
- Learn continuosly------------
- Set up an integrated IT support program---------
- Manage IR effectively----------
- Sound succession planning----------
Why is this so?
When so many talented people come into Qantas with the dream of making a difference and being proud to work for an Aussie icon ( pardon the jingoism) ......only to have all that ripped out of them to the point that you do the bare minimum due to nil recognition and lack of any respect for management.
What puzzles me though is , imagine what our profit figures would be IF we had some positives linked to the above 20 points. Granted a $1b pretax profit ain't half bad......BUT.......what if??????
I just saw Costello on the Sunday program declare that the Takeovers Tribunal panel was set up by him. He said that if the actions on Friday night were deemed by the Tribunal to be "UNSATISFACTORY" then the Tribunal will need to make the appropriate decision.
Ok then we'll see if this becomes yet another topic for the Academic's to put in their research papers:
WHEN....... NO MEANS NO!