Qantas grounded, chairwoman ousted

The law of unintended consequences decapitates the Qantas board after the proposed $9 billion de-listing of Australia's national airline fails and forces its most vigorous proponent to quit.

Eight months after Airline Partners Australia (APA), the private equity consortium led by Macquarie Bank and Texas Pacific Group, said it wanted to acquire Qantas, Australia's national carrier, the company's chairwoman has bowed to public pressure to step down.

In a filing to the Australian stock exchange, Margaret Jackson, who had championed the bid, said the past eight months had been testing. Coupled with 15 years on the board and seven years as chair, she felt it was a good time to move on and not stand for re-election to the board.

Jackson has been under fire for vigorously supporting the takeover. At one point she was quoted in The Australian, a daily newspaper, as saying that if shareholders didn't accept the consortium's A$5.45 a share offer, they must have a ?mental? problem.

Jackson and the consortium believed Qantas' share price would plummet to pre-bid levels of A$4.20 a share if the bid failed to go through. The takeover did fail, but so far Qantas shares have not traded under A$5.00. Jackson's decision to step down came shortly after APA retracted earlier plans to make a renewed offer for Qantas.

Officially, the consortium decided against proceeding with a renewed offer because it ?concluded that in the current environment and circumstances, a renewed offer on terms acceptable to APA would not be likely to succeed.?

Increased competition from budget Singapore-based airline Tiger Airways was cited by a source close to the deal as one of the circumstances that might have deterred the consortium from pursuing the takeover. But even if competition was indeed a factor, it is unlikely to have been the most critical factor. The Australian government is believed to have told Macquarie not to make another offer before the next federal elections, according to a number of local media reports.

The proposed Qantas sale had flown into resistance from unions and local politicians early on, but won the backing of the airline's management and initially the Australian government.

Intel teams with Warburg Pincus
Intel Capital, along with Warburg Pincus and Synopsys, has agreed to invest in a Series B financing round for Phoenix Microelectronics, a Chinabased chip design company that provides intelligent SIM cards for mobile terminal devices. Financial details were not disclosed.

In addition to Phoenix, Intel has also led a B-series investment round in 51.com, a Chinese social networking website. The site with 60 million registered members provides blogging services.

PEP gives Flight Centre another go
Sydney-based Pacific Equity Partners has reached a preliminary agreement with the board of Australia-listed Flight Centre on a joint venture that will allow it to take a 30 percent stake in the travel agency ? just a few months after a failed take-private bid.

Flight Centre said it ?expects to receive about A$1.1 billion ($907 million) in cash proceeds from the transaction, to be sourced from debt facilities entered into by the joint venture and the amount paid by PEP ($195 million) in acquiring its economic interest.?

The proposed sale to the joint venture ?will not be conditional on the outcome of the scheme of arrangement to facilitate the subsequent off-market buy-back of FLT shares?.

The company added that the scheme would be subject to a resolution passed by 75 percent in value and 50 percent in number of those voting at a forthcoming shareholder meeting.

Pacific Equity Partners' previous attempt to privatise the company was blocked by Lazard Asset Management, which controls more than 25 percent of Flight Centre's shares.

Alinta picks Babcock & Brown
Australian energy utility Alinta is backing an A$8 billion ($6.66 billion) takeover offer from Babcock & Brown instead of a rival bid by Macquarie, because it believes the former offers a ?high degree of completion certainty?.

Babcock & Brown is leading a consortium that comprises three of its listed funds alongside Singapore Power, a strategic partner that owns assets in Singapore, Australia and Taiwan. The consortium upped a previous offer for Alinta to A$16.06 ($13.70) per share, comprising both cash and securities, to ward off competition from Macquarie Bank.

Macquarie's takeover interest in Alinta has stirred controversy in Australia, because of its long-standing role as the company's financial advisor.

Babcock & Brown's offer values Alinta at A$16.46 a share including tax credits, trumping Macquarie A$15.80 per share all-cash bid. The offer price has improved by more than A$1.00 a share since an initial recommended proposal.

KKR makes a quick flip
Kohlberg Kravis Roberts has sold Cleanaway for A$1.25 million ($1 billion) to Transpacific Industries, Australia's largest garbage collector. The exit comes eleven months after the buyout group acquired the business. KKR reportedly made a A$250 million ($206 million) profit from the deal.

Transpacific was one of the groups that lost out to KKR in the original auction by Brambles, a logistics group. KKR had bought Cleanaway and a mining services unit for A$1.83 billion. Cleanaway's assets were valued at about A$1 billion at that time, which implies a 25 percent profit in less than a year, according to Bloomberg.

Dragonvest seeds Chinese media player
Shanghai-based venture capital firm Dragonvest Partners is providing C9 Media, a producer and distributor of interactive television content, with $750,000 in seed capital to fund the launch an interactive television service in China. Jesse Parker, a Dragonvest cofounder, will join the C9 Media board.

Founded in January this year, Beijingbased C9 Media generates revenue from fixed line and mobile telecommunications services associated with its interactive TV programs, and shares revenue with its TV channel and other partners, according to a statement.

Dragonvest is progressing toward closing a $30 million China venture fund, a first for the firm, which also has an office in Beijing and a presence in the US.

ChrysCapital buys into Indian cable operator
India-focused private equity firm ChrysCapital has reportedly invested $60 million buying a 15 percent stake in Hathway Cable from two existing shareholders. The deal values the Indian cable operator at $400 million.

ChrysCapital is acquiring an 11 percent stake from Raheja and 4 percent from Star TV. Star paid $75 million for the 26 stake it holds in the company, according to a report in India. Following the transaction, Raheja's and Star's stakes will be trimmed to 63 percent and 22 percent respectively. Hathway has operations in 13 Indian cities.

New Delhi-based ChrysCapital, which is currently investing from a $550 million fund, could not be reached for comment.