The world's biggest airline buyout, an A$11 billion (US$9 billion) offer for Australia's Qantas Airways, hung in the balance on Friday after the bidders reported a small rise in shareholder acceptances just hours ahead of a final deadline.
The group, including Macquarie Bank, said it had control of 34.59% of Qantas, up from 27.78% on Thursday, but still well short of the 70% it needs to secure the airline.
The sale of the national icon, dubbed the Flying Kangaroo, has met with some political and strong union opposition but was backed by the Australian government as well as Qantas management.
The bid group, Airline Partners Australia (APA), is betting on a late rush of acceptances from hedge funds that own more than 40% of Qantas ahead of a 7 p.m. local time deadline.
"The reality is this continues to be a knife edge and APA will be relying on both investment and hedge fund acceptances to get over the line by the offer close," APA director David Coe said. Qantas shares traded flat at A$5.37, suggesting investors believe the group's A$5.45 offer will succeed.
"The driver of the outcome today is going to be the hedge funds. They will determine whether APA gets over the 50 percent hurdle," said BBY analyst Fabian Babich.
The consortium, which also includes private equity firm Texas Pacific Group, can extend the offer for two weeks if it reaches 50% of acceptances by the deadline, but will still need 70% to cross the line in a fortnight.
If it fails to hit 50% on Friday, the offer will expire. It cannot raise the current offer but could launch a new bid at a later date.
The level of acceptances under an institutional acceptance facility was 1.44% from 5.19% previously.
Including shares placed into the facility by institutions, who can withdraw them if they choose, total acceptances were 36.03%, up from 32.96% on Thursday.
The offer has been hanging in the balance for weeks after some key shareholders said the A$5.45 offer was too low, forcing the bidders to ease their conditions and offer shareholders incentives to accept.
Balanced Equity Management, which controls about 4% of the airline's stock, and UBS Global Asset Management, with 6%, have indicated previously they would not back the bid. Neither were available to comment on Friday.
APA does not expect to announce the result of final acceptances until the weekend or Monday, saying it will take time to count the votes, a source said.
The bid group also includes Allco Equity Partners, Allco Finance Group and Canadian investment firm Onex Corp.