Qantas rejects A$10.9 billion take-over offer, with CEO Dixon and CFO Gregg abstaining from vote

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Australia's Qantas Airways has received a much anticipated take-over offer but today publicly rejected it.

The Oneworld carrier says in a statement today that a consortium has made a non-binding offer to buy 100% of the company for A$5.50 ($4.34) a share but the “non-executive directors consider that the terms of the proposal are not acceptable”.

The airline’s chief executive Geoff Dixon, said yesterday in an emailed message to staff that the Qantas board decision to reject the take-over has “the support of all directors” including “Peter Gregg and myself and the senior executive team at Qantas”.

Dixon is a director of the airline, as is Gregg who is the airline’s chief financial officer, but both men refrained from voting on the matter when it came to a vote by the airline’s board of directors.

Qantas in Sydney says Dixon and Gregg refrained from voting “because they have a potential material interest in the bid”. Some Australian newspapers have speculated that the take-over consortium might offer the airline’s top-management shares in the airline if the take-over succeeds.

Qantas’ stock price has doubled since July and in recent days the price has reached a seven-year high thanks in part to speculation about the impending take-over offer.

But Dixon’s decision to speak-out publicly against the bid suggests he is opposed to the take-over offer in its current form.

Earlier today the airline’s non-executive directors rejected the A$5.50/ a share take-over offer as unacceptable and added the offer “incorporates a number of complex conditions, the requirement for unanimous support by Qantas directors and a break fee”.

It says the offer “incorporates a number of complex conditions, the requirement for unanimous support by Qantas directors and a break fee”.

“Implementation is proposed to be effected by way of an off-market take-over bid with a 90% minimum acceptance,” it adds.

The consortium, which is promoting itself under the banner Airline Partners Australia, has since responded Qantas’ public rejection by highlighting that Australian interests have a majority stake in the consortium.

In a statement, the consortium says it is “majority Australian owned” and that the partners are: Australia’s Allco Finance Group/Allco Equity Partners with 34%, Australia’s Macquarie Bank with less than 15% and some overseas partners that have a combined stake of less than 40%.

It adds, the foreign partners include Texas Pacific Group and Onex.

The A$5.50/share offer values the Australian airline group at A$10.9 billion and represents a 5-10% premium over its current share price.