Australia's takeover regulator has scuttled an A$11 billion ($9 billion) bid for Qantas Airways after refusing on Sunday to allow late support from a major shareholder who missed a deadline to accept the offer.
Qantas said it considered the takeover bid for the airline to have failed.
"The Qantas board considers that the current bid has failed," the airline said in a statement late Sunday, adding that the bidding group had made several applications to the regulators over the weekend. "Accordingly, Qantas will proceed with strategies and plans for its future," the statement said.
Analysts agreed that the world's largest airline buyout was effectively dead after the Takeovers Panel rejected an appeal from the bid group to include the late acceptance and so allow the offer to proceed.
However, the bid group, which includes Macquarie Bank and private equity firm TexasPacific Group, said it would appeal the decision.
"The offer is dead in its current form. Whether they come back or not and are prepared to dedicate those resources to another bid is uncertain," Shaw Stockbroking analyst Brent Mitchell said.
The bid group, Airline Partners Australia, failed to reach the 50% of shareholder acceptances it needed to trigger a two-week extension of the offer by a Friday deadline.
But APA said on Saturday a late acceptance from a major U.S. investor hours after the deadline had pushed the acceptances to 50.6% and asked the Takeovers Panel to review the case.
The panel said Sunday it had rejected APA's application.
"The panel does not accept that Qantas shareholders have not had a reasonable opportunity to participate in the offer," it said in a statement.
"Shareholders were well aware of the deadlines and the implications of not accepting by the deadlines."
APA, said in a statement it was seeking an "urgent review" of the decision.
The Takeovers Panel said it was appointing a sitting panel to consider the review application.
APA declined to identify the U.S. shareholder but local newspaper reports named U.S. billionaire Samuel Heyman.
Faced Political, Union Opposition
The sale of the national icon, dubbed the Flying Kangaroo, has faced political and strong union opposition, but was backed by the Australian government as well as Qantas management.
However, some key shareholders attacked the A$5.45 per share offer as too low, forcing APA to reduce the level of shareholder acceptances needed for the deal to 70% from 90%.
Qantas shares, which closed at A$5.38 on Friday, were expected to fall when they resume trading on Monday.
"Qantas shares have gained quite a bit in recent weeks on a lot of speculative trading. So if the bid fails, the share price would very likely fall to about A$5 when trading resumes," said BBY analyst Fabian Babich.
Shaw's Mitchell said the role of senior Qantas management who supported the deal, particularly Chairman Margaret Jackson, was also in doubt.
"It is hard to see her staying and her position is untenable," Mitchell said.
The bid group also includes Allco Equity Partners, Allco Finance Group and Canadian investment firm Onex.