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Thu, Dec 14, 2006

Qantas Accepts $8.7 Billion Takeover Bid

Consortium Sweetened Deal After Initial Offer Rejected

Press reports from the land down under say the country's flagship carrier Qantas has accepted an $11.1 billion (Australian) buyout bid from a consortium made up of Allco Equity, Macquarie Bank, US buyout specialist Texas Pacific and Canada's Onex.

The group, calling itself Airlines Partners Australia (APA), upped its initial offer to $4.32 per share on Tuesday, which Qantas rejected.

Investment company J.P. Morgan said they expected Qantas to accept after APA upped its offer and changed some of the sale conditions. Reports indicate the accepted bid works out to $5.60 per share.

One sticking point on Tuesday's offer was a $79 million break-up fee should the deal fall through. That amount was dropped an unspecified amount on the follow-up offer.

As ANN reported, APA first bid for Qantas on November 21, at $7.9 billion. It looks like patience paid off.

Australian ownership rules prohibit foreign ownership or control of any of the country's airlines. Foreign partners Texas Pacific and Onex would own less than 40% of the airline under the bid.

Throughout negotiations, the consortium said it was commited to maintaining Qantas' maintenance and safety record, and that it supports management’s plans to invest in excess of $10 billion over the next five years and to purchase more than 70 new aircraft.

Media reports in Australian newspapers all seemed to agree APA's overture was never intended as hostile, and Qantas never considered it as so.

FMI: www.qantas.com

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