Qantas: Would You Sell To Foreigners?
November 23rd 2006 11:05
How would you feel, dear reader, if the Flying Kangaroo suddenly became a foreign entity?
The news today, 23 November 2006, is that Qantas is being preyed by two prospective buyers: a US private equity firm, Texas Pacific Group and Macquarie Bank Ltd.
The buyout could be of as much as $11 billion or $5.50 a share.
Sydney-based Allco Finance Group Ltd, a company which operates aircraft leasing, is also considering taking part in the consortium.
There are, though, “numerous stakeholder issues involving the federal government, Qantas management, unions, the competition regulator and airline partners,” Paul Ryan from Goldman Sachs JBWere said.
One of the problems is that the Qantas act limits foreign investment in it to 49 per cent of the airline total and also limits individual shareholders, foreign or local, to 25 per cent.
This news was published in the online version of the Sydney Morning Herald, under the title “A takeover of Qantas is difficult: analysts”. Click here to open this page: http://www.smh.com.au/news/business/a-takeover-of-qantas-is-difficult-analysts/2006/11/23/1163871539944.html?page=fullpage#contentSwap1.
Qantas (ASX: QAN) is certainly a prosperous business. Its current Net Profit After Tax is $479.5 million and it’s selling for a multiple of 17 times to its EPS of 28.8 cents. Today’s share price is $4.93.
It displays also strong Operating Cash Flows, being the current per share figure 104.8 cents.
Its Return On Equity, though, on average for the last six years, is unimpressive at 10 per cent.
A worrying feature of Qantas is its debt. Long Term Debt is $5,785.8 million or 49 per cent of Capital (Equity plus Debt). If Qantas had to repay its debt with the whole of its net profit it would take 12 years to do it.
The question about Qantas now is not its prosperity but its symbology. The Flying Kangaroo is a national symbol and many Aussies own a share of it—and want to keep it that way.
The hurdles for the predators in this tale are many and great. Will they manage to take Qantas away? It’s a story worth following.
End
The news today, 23 November 2006, is that Qantas is being preyed by two prospective buyers: a US private equity firm, Texas Pacific Group and Macquarie Bank Ltd.
The buyout could be of as much as $11 billion or $5.50 a share.
Sydney-based Allco Finance Group Ltd, a company which operates aircraft leasing, is also considering taking part in the consortium.
There are, though, “numerous stakeholder issues involving the federal government, Qantas management, unions, the competition regulator and airline partners,” Paul Ryan from Goldman Sachs JBWere said.
One of the problems is that the Qantas act limits foreign investment in it to 49 per cent of the airline total and also limits individual shareholders, foreign or local, to 25 per cent.
This news was published in the online version of the Sydney Morning Herald, under the title “A takeover of Qantas is difficult: analysts”. Click here to open this page: http://www.smh.com.au/news/business/a-takeover-of-qantas-is-difficult-analysts/2006/11/23/1163871539944.html?page=fullpage#contentSwap1.
Qantas (ASX: QAN) is certainly a prosperous business. Its current Net Profit After Tax is $479.5 million and it’s selling for a multiple of 17 times to its EPS of 28.8 cents. Today’s share price is $4.93.
It displays also strong Operating Cash Flows, being the current per share figure 104.8 cents.
Its Return On Equity, though, on average for the last six years, is unimpressive at 10 per cent.
A worrying feature of Qantas is its debt. Long Term Debt is $5,785.8 million or 49 per cent of Capital (Equity plus Debt). If Qantas had to repay its debt with the whole of its net profit it would take 12 years to do it.
The question about Qantas now is not its prosperity but its symbology. The Flying Kangaroo is a national symbol and many Aussies own a share of it—and want to keep it that way.
The hurdles for the predators in this tale are many and great. Will they manage to take Qantas away? It’s a story worth following.
End
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