We couldn't do ourselves justice if we didn't make some mention of Qantas (ASX: QAN). We noted the headline from Bloomberg News, "Qantas's Dixon Tells Staff Airline in 'Sweet Spot.'" Clearly this 'Sweet Spot' must have materialised at some point after the Airline Partners Australia / Qantas takeover died. The inside running is that Dixon will release full details of the 'Sweet Spot' to the market on Thursday.
We can only wonder what this will do to the share price. As of the close of business yesterday, Qantas shares were within striking distance of the $5.45 APA offer, and trading at $5.32 were trading in excess of where it had been during much of the painfully pathetic takeover period since late last year.
GoldmanSachs JBWere analyst Paul Ryan told Bloomberg the "failed bid has highlighted the value in Qantas's core airline strategy, asset base and balance sheet." He went on, the "board now faces a more activist shareholder base seeking implementation of measures to crystallise this value."
Not being privy to the Qantas shareholder register, we wonder how much selling there has been by the hedge funds that were initially only interested in whipping in and out for a quick profit? It can only mean one of possibly three things: either the hedge funds are happy to sit and wait it out, especially as they may have picked up stock for as low as $5.20 or so; or they have been selling into strong buying; or just as likely, that the hedge fund presence on the register was much less than had been predicted.
Then we hear this morning that APA consortium leaders Macquarie (ASX: MBL) have now revalued the airline at $17 billion! Considerably higher than the $11 billion that they had offered under the takeover deal. That must make them even more disappointed that they missed out on such a bargain. With this revelation we can certainly now see that it is a genuine case of 'Seller Beware' when it comes to takeover offers.
Kris Sayce
The Daily Reckoning Australia
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About the Author
Kris Sayce began his financial career in the City of London as a broker specializing in small cap stocks listed on London's Alternative Investment Market (AIM). At one of Australia's leading wealth management firms, Kris was a fully accredited adviser in Shares, Options and Warrants, and Foreign Exchange. Kris was instrumental in helping to establish the Australian version of the Daily Reckoning e-newsletter in 2005. In late 2006, he joined the Melbourne team of the leading CFD provider in Australia.
