KEY POINTS:
Advertisements in Australia's main newspapers yesterday urged Qantas shareholders to sell their shares or have their value plummet.
The warning came from the Airline Partners Australia consortium as its takeover bid for the national airline approaches its Friday deadline.
The Macquarie Bank-led consortium said yesterday acceptances for the
A$11.1 billion ($12.4 billion) bid had slipped to 25.5 per cent from 27.8 per cent.
It is seeking 70 per cent of Qantas, and said failure to secure the deal would cause a crash in the airline's share value.
But analysts have watched steep rises in aviation stocks, and believe that despite APA's argument that Qantas shares have never traded as high as its A$5.45-a-share offer, the bid now undervalues the airline - and that failure to close the deal would not mean disaster.
This view was put forcefully by Andrew Sisson, founder of Balanced Equity Management, one of two investors which between them control more than 10 per cent of Qantas.
Balanced Equity and UBS Global Management blocked APA's original target of 90 per cent of Qantas shares, forcing the consortium to lower its goal to 70 per cent at the cost of a refinancing deal that would leave the airline heavily in debt if the takeover succeeded.
The revised bid closes at 7pm on Friday. If APA achieves more than 50 per cent acceptances the offer will automatically extend for a further 14 days.
Sisson said Balanced Equity had considered that when Qantas directors recommended acceptance of the bid, their decision was "probably reasonable and certainly defensible".
But since then, shares in airline stocks had soared.
The market value of rivals such as Virgin Blue, Singapore Airlines and Air New Zealand has more than doubled since the bid was announced, and the Bloomberg World Airlines Index has climbed by one-third.
"We are committed not to accept the bid," Sisson said. "We don't think [APA's offer] is a very good price."
His company thought Qantas was one of the better value stocks in the market, "so we'd be a buyer rather than a seller".
Sisson said he would be prepared to sell at the right price. Asked if that meant an A$1 increase in the offer, he said: "I don't want to commit to any number but that's in the right ballpark."
Sisson also said that he would be equally happy for the bid to collapse or for APA to win 70 per cent.
"If it collapses, we think the company can continue on and we think it's good value.
"If the private equity consortium does get control, and of course it could be between 50 and 70 per cent yet, we think that's going to be a good situation for shareholders as well."
APA disputed this view, warning that shareholders will suffer if the bid collapses.
"If the offer fails, it is almost certain that the Qantas share price will fall," APA director and spokesman Bob Mansfield said yesterday. "Remaining shareholders who wish to accept the offer should do so immediately."
