After a night of intense lobbying from Canberra and the Qantas board and in the face of enormous media pressure, Macquarie Bank this morning grudgingly raised the white flag on its most ambitious corporate play and declared its $11.1 billion Qantas takeover dead.

The APA statement was released shortly after 9am this morning, followed by a Qantas board statement that oozed relief declaring that trading would resume this morning.

And what a resumption it was as Qantas shares traded in a range between $5.13 and $5.24, thereby ridiculing predictions from Margaret Jackson down that the stock would tank if the bid failed. The first hour saw more than 100 million shares trade hands as we head for a $1 billion-plus day.

It has to be said that APA’s ambiguous statement this morning about “the possibility of making a renewed offer for Qantas” put a floor under the price.

Foreign hedge funds were the biggest sellers as they sprinted to the exit, disposing of their illegally purchased shares that the Government and the Qantas board turned a blind eye to over the past few months. And with the Australian dollar rising so strongly in recent weeks, most will walk away with a small profit.

While the Millionaire Factory has suffered a reputational hit, the juggernaut continues with the audacious $10 billion-plus (including debt) offer for Alinta which, if successful, would easily be its biggest-ever deal.

If Macquarie walks away from Qantas it will suffer a financial loss of more than $30 million underwriting the expenses of its entire consortium, but its shares are only down 34c to $90.29 this morning, well up from the $75 they were trading at before the bid was launched.

Having made $200 million in a few months flipping Boart Longyear from Salt Lake City to the ASX, the APA financial loss is a drop in the bucket, although the reputational hit and $100 million-plus in foregone profits must still hurt.

APA was trying to have it both ways this morning, revealing that hedge funds holding 6.09% of the stock were prepared to accept for their shares on the “no partial acceptance” clause which is standard in takeovers, but only applies to holdings in the same legal structure.

Credit Suisse was the ethically challenged vehicle which agreed to hide most of Samuel Heyman’s 10% stake in a cash-settled swap structure and you can see from its 85-page disclosure statement on 3 May that there were numerous different legal vehicles involved.

No wonder the APA statement this morning admitted “the correct legal interpretation is not clear”. APA made the right call that the uncertainty from litigating such an outcome was intolerable, so the bid had to lapse.

The big question now is who decided to issue that premature and hare-brained press release at 8.30pm on Friday night?

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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