Australia’s Qantas Airways has been approached by Macquarie Bank and private equity firm Texas Pacific Group about a takeover that analysts said Wednesday could be worth almost 11 billion Australian dollars, or $8.5 billion.
Qantas’ stock soared as much as 20 percent during trading Wednesday after the airline announced in a statement it had been approached by Macquarie and Texas Pacific, without giving details.
Shortly after the market closed, Macquarie released its own statement saying it had held preliminary “indicative talks” with Qantas about a possible takeover.
Neither Qantas nor Macquarie gave any details of the talks, though the Sydney-based bank said any offer would adhere to existing ownership rules made by the government, which prevent more than one stakeholder having more than 25 percent of the company and limiting foreign ownership at 49 percent.
A spokeswoman for Texas Pacific Group, based in Fort Worth, Texas, said she had no comment.
Market analysts said there was speculation the Macquarie-led consortium was preparing an A$5.50 a share cash offer for Qantas, which would value the airline at almost A$11 billion ($8.5 billion).
A takeover of Qantas would likely be one of the country’s largest, but would face significant legal and political hurdles as a result of regulations, introduced when the government privatized the company in 1995.
Qantas Airways Ltd. is Australia’s biggest carrier with more than 200 planes and flights routes to 142 destinations in 40 countries and an extensive network of domestic routes.
In a letter Wednesday to the Australian Stock Exchange, acting Company Secretary Cassandra Hamlin said Qantas “has received an approach by Macquarie Bank and the Texas Pacific Group on behalf of a consortium they represent.”
“The approach is confidential and incomplete and is being investigated by Qantas,” the statement said.
Qantas’ share price jumped as much as 20 percent to a seven-year high of A$5.25 before falling back to close at A$5.
After the close, Macquarie said in its own statement that if a proposal was made it would confirm to existing laws.
“In particular... there will be continuing majority Australian ownership,” it said, adding that “Any such proposal would be conditional upon the support of the Qantas board.”
Deputy Prime Minister Mark Vaile said on Wednesday the government had no plans to change the Qantas regulations, and would stay out of any sale.
“On the commercial side, it is for the board of Qantas and the shareholders of Qantas as to what they do,” Vaile told reporters.
Aequs Securities institutional dealer Ric Klusman said market speculation was the offer would fall between $A5.20 to A$5.50 per share, which would value Qantas at A$10.3 billion to A$10.9 billion ($7.2 billion-$8.47 billion).
The Australian Financial Review, which first reported on a possible Macquarie and Texas Pacific bid for Qantas, reported Wednesday a plan was being considered within existing rules.
Under the deal, Sydney-based Macquarie would take a 25 percent stake in Qantas, other Australian investors would take another 25 percent, Qantas senior management would take 1 percent, and foreign investors led by Texas Pacific would take the remaining 49 percent, the paper reported.
Texas Pacific Group is a venture capital firm that manages more than $1 billion and has offices in United States, Hong Kong, India, London, Japan, South Korea and Australia.
The bid is the latest in a multibillion-dollar surge of private equity into Australia, including an A$18 billion bid by a consortium led by Kohlberg Kravis Roberts & Co. and including Texas Pacific for Australia’s second-largest retailer, Coles Myer. Coles rejected the bid as inadequate.
Media companies Seven Network Ltd. and Australian Consolidated Press have each struck deals worth more than A$4 billion ($3 billion) with private equity firms in recent weeks, positioning themselves to expand when new media laws that drop foreign ownership restrictions come into effect next year.
Qantas reported a 30 percent drop in annual net profit to A$479.5 million in the year to June 30, blaming rising fuel prices which have since fallen. The airline also reported an 8.6 percent rise in sales, to A$13.65 billion, and predicted net profits for 2006-07 would be in line with 2005-06.