The Qantas stick-up is turning into a classic example of how an educated market can be the natural enemy of a leveraged equity buyout.
The longer and more desperate a deal gets the more the public starts to ask the sort of serious questions that hold-out institutions such as Balanced Equity management, UBS Global Asset Management and Maple-Brown Abbott were asking close to day one of its announcement.
But that was nearly five months ago, an eternity for the likes of David Bonderman, the airline raider par excellence whose Texas Pacific Group was once linked by Lindsay Fox to his silly attempt with Tesna to grab the Ansett terminals under the guise of re-starting the airline.
Bonderman must be truly fascinated by some bigger opportunity than the fee fest that has Macquarie Bank in thrall.
Since late November, when the public learned what some sections of the Qantas board had known about the deal for much longer, the pleadings to shareholders to sell have become so shrill that even Alan Kohler was moved in his Saturday column to urge everyone to jump on board and go along for a fee free ride.
It was one of Kohler’s best efforts yet, so good it could have written by Terry McCrann.
The jagged peaks that rise up in front of the APA bid in this incredibly long time line are the profit upgrades given so reluctantly by a Qantas management which undermined the credibility of ‘we are all doomed’ utterances the market has come to expect from Geoff Dixon.
Dixon has the throttles rammed forward to maximum power and the nose of the Qantas enterprise pulled as far back as the control column will go in this final effort to clear the jagged peaks of doubt that lie directly ahead of the management cockpit.
To keep to the flying metaphor, he has flown the APA Dreamliner to a point where airline pilots either get dead lucky, or dead.
The slow extraction of the truth about the deal from the babble that has gushed from APA about the urgency with which people should sell to them has made ordinary share holders as well as superannuation fund managers ponder the consequences of capital gains tax liability in this country.
Why would you sacrifice as much as half the profit you would get on a stake in Qantas in accepting the deal, and loose one of the more attractive franked dividend streams available in listed air transport among global network carriers?
The bid can succeed. There could be a last minute stampede to accept for all sorts of reasons, not all rational, and perceptions of air transport can be changed by external ‘shocks’ in an instant.
But at the moment the deal is like a pre-announced stick up for $4 billion or more from a bank that the hold up gang has yet to buy, using funds borrowed from other banks.
And the customers have been warned in advance that they can escape with as little as half of their deposits and none of their expected partially tax free earnings.