Qantas 'bait' For Brokers

The Age

Friday March 9, 2007

Jesse Hogan

BROKERS will be paid up to $750 for every one of their Qantas shareholder clients who accepts the $5.45-a-share takeover offer for the airline.

The inclusion of a broker handling fee was the reason for a fifth supplementary Bidder's Statement from the Airline Partners Australia consortium funding the $11.1 billion takeover.

The offer from the Macquarie Bank-led group is conditional on APA receiving more than 90 per cent of Qantas' shares by its April 3 offer deadline.

At close of trade on Wednesday, APA had rights to only 13.1 per cent of Qantas shares. It received acceptances for a further 24.9 million shares - 1.26 per cent of the airline - the day after the Federal Government approved the potential takeover. The shares closed 1? lower at $5.31 yesterday.

Austock Securities senior client adviser Michael Heffernan said APA aimed to "sweeten the pie by encouraging brokers to go that extra mile to get those extra votes".

Mark Potter, associate director of Adelaide-based Baker Young Stockbrokers, believed the handling fee had been introduced because of the structure of Qantas' shareholder base.

"Occasionally where there is a broad range of retail shareholders the bidder can throw in a carrot such as this to incentivise brokers to get their clients to accept," he said.

The offer will be limited to shareholders with fewer than 100,000 Qantas shares, and will not be paid if shareholders send their acceptances directly to APA rather than through their broker.

The broker fee is 0.75 per cent of the amount APA will pay individual shareholders, from a minimum of $50 to a $750 maximum.

If every eligible Qantas shareholder accepted the APA offer through their broker, it would cost APA $17.2 million - less than 0.2 per cent of the bid value.