Qantas Reports Takeover Approach

SYDNEY ~ Australian flag carrier Qantas says it has received a takeover approach, potentially worth more than US$8 billion and sending its share price soaring to record levels.

The airline said it had been approached by Australia’s biggest investment bank, Macquarie, and the private equity Texas Pacific Group on behalf of a consortium they represent.

“The approach is confidential and incomplete and is being investigated by Qantas,” the company said in a brief statement to the Australian Stock Exchange on Wednesday.

The airline said that over the years it had undertaken a series of discussions with a range of individuals and companies, including airlines, on possible partnerships, joint ventures and acquisitions.

Shares in the airline were up 15.4 percent at AUS$5.02 ($3.86) at 12:30pm on Wednesday after earlier hitting a record high of $5.25 on the announcement.

Analysts said numerous hurdles would have to be overcome for the takeover to be successful, including a 49-percent foreign ownership restriction on Qantas and a limit of 25-percent equity for any single partner.

CommSec equity analysts said the bid could be pitched at $5.50 a share, which would value the deal at around $10.9 billion ($8.4 billion) and may involve privatizing the airline.

Qantas reported a net profit of $479.5 million for the year to June – a 30-percent slump over the previous year that was blamed on spiraling fuel costs.

The Qantas Airways Group has a fleet of 219 aircraft and has placed firm orders for 20 Airbus A380 superjumbos, the world’s largest passenger aircraft.

Private equity groups have been active in Australia recently, buying into media giant Publishing and Broadcasting Ltd and Seven Network television ahead of a shakeup in ownership regulations.

The US-based Kohlberg Kravis Roberts last month made a failed $18.2-billion bid for Australia’s second-largest retailer, Coles Myer.

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