A takeover bid for national carrier Qantas worth A$11.1 billion (US$8.6 billion), cleared one of its most significant hurdles Tuesday when the Australian government announced it would not block the deal.
Treasurer Peter Costello said the government had approved the bid after receiving written guarantees from the international investment group making the offer that Qantas Airways would remain majority-Australian owned, and other assurances.
Airline Partners Australia, a group led by Macquarie Bank and including private equity firms Texas Pacific Group and Canada's ONEX Corp., has offered A$5.60 a share for Qantas, which the airline's board has recommended shareholders accept.
The deal must be approved by 90% of shareholders.
Costello said Qantas has given legally enforceable undertakings the airline will maintain services in regional areas and keep its maintenance operations in Australia, key areas of concern among government lawmakers.
"These terms and conditions in the articles of association and in the deed of undertaking continue Qantas as an Australia majority-owned company controlled by Australians," Costello told a news conference. "The government will allow the bid to go to the existing shareholders," he said.
Costello had the power to block the takeover bid under a vaguely-defined "national interest" test, after the bidding group submitted the bid to the Foreign Investment Review Board.
Some government legislators have opposed the deal going ahead because it could erode Qantas status as an iconic Australian company. Labor unions and other opponents say the deal could lead to job losses and other cuts at the airline, and that it involves the airline taking on too much debt.