Qantas Airways Ltd. has agreed to a sweetened $8.7-billion buyout offer led by Macquarie Bank Ltd. and private equity firm Texas Pacific Group, sources said today.
The offer of 5.60 Australian dollars a share, 10% above Qantas' last trade, was unanimously endorsed by the Qantas board after the bidders dropped their demand for a breakup fee, sources close to the transaction said. The board had rejected an offer of 5.50 Australian dollars on Wednesday.
"I think it's a reasonable price, given where Qantas was trading till recently," said Allianz Global Investors analyst Joh Snyman, adding that he was waiting to see what conditions were attached to the bid.
Analysts have said an offer of 5.50 Australian dollars or more was likely to be acceptable to most Qantas shareholders.
No immediate comment was available from Mascot, Australia-based Qantas.
The offer is 29% higher than Qantas' share price before the airline said Nov. 22 that it had received a buyout offer.
The bidding team has been shaped to ensure it meets ownership caps on Australia's flag carrier that require the airline to remain majority Australian-owned, with no individual shareholder owning more than 25%.
The consortium, Airline Partners Australia, includes Allco Equity Partners Ltd. with a 34% stake, Allco Finance Group Ltd. with 11%, Macquarie with less than 15% and Canadian investment firm Onex Corp. and Texas Pacific with a total of less than 40%.
Texas Pacific stands out among private equity firms in that it has a history of investing in the airline industry. It rescued Continental Airlines Inc. from bankruptcy in 1993 and has held stakes in the former America West and Ireland's Ryanair.
Qantas Chairwoman Margaret Jackson and Managing Director Geoff Dixon, known for their close ties to Australia's conservative coalition government, are expected to lead the effort to persuade Canberra that the deal is in the national interest.