Qantas Airways has accepted an A$11.1 billion ($8.7 billion) revised buyout offer led by Macquarie Bank and private equity firm Texas Pacific Group, in Australia's biggest takeover and the world's largest airline acquisition to date.
Just a day before, Qantas rejected a slightly less generous bid from the same group.
In interview with CNBC Asia's "Market Watch", Qantas's Chief Executive Officer Geoff Dixon said that Qantas has long been an undervalued company compared to other international airlines given its performance.
"I think the people that have given us the money to invest billions in aircraft and have enabled us to grow the company and provide jobs deserve to get their day. And they got it today.", said Mr. Dixon.
The sweetened bid raises the buyout price by 10 Australian cents to A$5.60 per share. It also drops a demand for a break-up fee. The offer is 10% above Qantas's last trade and will be unanimously endorsed by the Qantas board, subject to receiving an opinion by independent expert Grant Samuel.
Qantas shares closed up 19 Australian cents or 3.7% higher at A$5.28 Thursday, but remained below the offer price, suggesting that investors were not holding out for a better bid. The offer price is 29% higher than Qantas's share price before the airline said on Nov. 22 that it had been approached with a buyout offer.
The bid values Qantas at 15.9 times forecast earnings, compared with regional rivals Singapore Airlines trading at 12.9 and Cathay Pacific Airways at 17.8, according to Reuters data.
Qantas started out as a government-owned enterprise, later becoming a publicly listed company on the Australian Stock Exchange. And if this offer is approved by 90% of Qantas shareholders, the airline will make the transition into a private company.
The bidding team has been shaped to meet ownership caps on Australia's flag carrier, which require the airline to remain majority Australian-owned, with no individual shareholder owning more than 25%.
The consortium, Airline Partners Australia, includes Allco Equity Partners with a 35% stake, Allco Finance Group with 11%, Macquarie with less than 15% and Canadian investment firm Onex and Texas Pacific with a total of less than 40%.