Qantas rose on takeover rumour

November 8th, 2006

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Yesterday, as reported by the Australian Financial Review (AFR), there were rumours of Qantas being a takeover target. Consequently, the share price shot up from $4.20 to $4.31. At one point, speculators were trading Qantas shares at the record high of $4.36.

We marvelled at the foolhardiness of the speculators who, based on this gossip, rushed to buy Qantas shares. Anyone who knows what they are doing will know that it is highly unlikely that Qantas will be taken over. Firstly, the law forbid any foreigners from owning more than 25 per cent of Qantas and all foreigners can hold a total of only 49 per cent of it. Secondly, we doubt there is any good value for Qantas shares at this level of price.

Needless to say, if any private equity company wants to buy up our holding of Qantas shares, we will gladly sell it to them.

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