Australia's Qantas Airways has received a buyout offer from investment firms Macquarie Bank and Texas Pacific Group that could be worth more than (Australian dollar)$10 billion, sending its shares up 15 per cent.
"The approach is confidential and incomplete and is being investigated by Qantas," the airline said in a statement, after a newspaper reported that a Macquarie-led buyout possibly worth A$10.3 billion was in the works.
A deal, which could rival US Airways Group's $8 billion bid for Delta Air Lines, would mark a change in strategy by private equity groups that had been hunting for cash-rich retail and media assets in Australia. However, private equity firm Texas Pacific has always chased airlines. Its first deal was the rescue of Continental Airlines in 1993.
It has held stakes in the former America West and Ryanair and has previously bid for stakes in Air Canada and South African Airways Investment bank Macquarie, for its part, has chased everything from top Australian ports group Patrick to the London Stock Exchange over the past year.
A Qantas spokesman could add nothing further to its statement and Macquarie declined to comment.
Qantas shares soared to a record A$5.25, and closed up 15 per cent at A$5.00, valuing the group at A$9.9 billion.
"This has come as a complete surprise as it is not the usual candidate for private equity," said James Holt, a portfolio manager with Zurich Financial Services, which holds about A$10 million worth of Qantas shares. Holt said he would have sold Qantas if it had been trading at this price before but was now holding on.
"Given that it's in play now, you will have to keep your options open." Two analysts said the market was speculating on a bid at A$5.50 a share, which would value Qantas at A$10.9 billion.
That would equate to 18.5 times forecast earnings for 2007, ahead of its two bigger Asian rivals by market value, Singapore Airlines , at 12.4, and Cathay Pacific Airways at 17.5.