The immediate headlines this morning are shouting that Qantas has knocked back the MacTexasCoe $11 billion takeover bid, sending down its share price. But this is just another step in the saga – Qantas hasn’t done a Coles yet.

The wording of today’s Qantas announcement carefully states that the non-executive directors “consider that the terms of the proposal are not acceptable”. What the Qantas shareholders need to know is which terms are not acceptable.

Qantas confirms the offer price is $5.50 but the pitch is non-binding, includes a number of complex conditions and demands the unanimous support of Qantas directors and a break fee.

In other words, the private equiteers are just trying it on at this stage and are still at the negotiating stage. A sceptical soul might even think the bidders are having trouble locking in all their financing and equity commitments and are thus playing for time with a half-baked offer.

Indeed, the wording of the bidders’ release to the ASX hints that all is not finalised. Airline Partners Australia, as the equiteers are calling themselves, said they are made up of Allco Finance Group with 11%, Allco Equity Partners “circa” 34%, MacBank “less than” 15% and offshore investors including TPG and Onex a total of “less than” 40%. My, my, what a very big swallow for David Coe’s Allco group.

Or you might think Texas Pacific Group is used to dealing with airlines in trouble and drowning boards happy to clutch at any offered straw. Qantas has a balance sheet and a board capable of walking away however rich the carrot being dangled in front of senior management.

Qantas could also keep the market better informed by saying whether or not TPG has been allowed to do due diligence yet. If it has, the equiteers have just damaged their credibility by not making a serious bid. If the books have not been opened, there’s more negotiating to be done to get to that stage.

A break fee for a non-binding and highly conditional bid is simply cheeky. More boards should have the strength to reject such nonsense.

So the game rolls on with the ball still in the bidders’ court. There’s enough reputation, talent and experience on the Qantas board to ensure the barbarians won’t come aboard without paying full price for their tickets.

Peter Fray

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