Qantas Bid Consortium Retreats, Perhaps To Fight Again

AIRLINE Partners Australia has returned all the shares it was holding in Qantas to shareholders amid speculation that it may wait until after the federal election before embarking on another takeover attempt.

The Macquarie Bank-led consortium announced it had handed backmore than 686 million shares from those who had accepted its $5.45 offer for Qantas, which spectacularly failed on Friday.

The consortium remained bunkered down in meetings yesterday as it tried to decide whether to come back immediately at $5.45 a share or let the matter settle before returning for another raid on Qantas.

It is believed to be considering delaying another tilt for the airline until the end of the year, with the Howard Government uneasy about giving the green light to a second unpopular grab for Qantas before the federal election.

A Government source said it would not necessarily block another takeover attempt by APA but "it would be preferable if they just went away for now".

"It is deeply unpopular and not something that the Government really needs right now," the source said.

It is expected that the consortium would need a better bid than the $5.45 offer to gain support from the Qantas board.

Hedge funds have also begun to bale out of their Qantas holdings, not willing to accept the risk of a revived bid by APA. Those shares are being picked up by longer-term funds.

That effect stabilised the Qantas share price, which lifted 1¢ to $5.23, 22¢ lower than APAs offer price.

Jason Bloom, head of transport research at Deutsche Bank, said Qantas share price was being helped by thoughts of another takeover attempt.

"Clearly there is a wee bit of a takeover premium in the price," he said. "People are thinking well, APA are going to come back at the same level or a higher level or perhaps someone else is going to come along, given just about everything is up for sale at the moment."

Mr Bloom said the consortium would be aware it would come up against "a less friendly Qantas board and maybe a less willing Government".

"It will definitely be in the back of their minds that they have to go through the whole process again and get the boxes ticked," he said.

"The longer we dont hear anything from APA the smaller the chance that they are going to come back. As time goes on and people realise they probably arent going to come back, then you will see the share price drift downwards to around $5."

The Qantas board maintained its silence, refusing to take questions on the failed takeover bid. It would not comment on the level of foreign ownership of Qantas, which is required to remain under 49 per cent.

The airline is undertaking a reconciliation to ensure it is compliant with the Qantas Sales Act.

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