Michael Pascoe writes:

The commentariat is giving Toll Holding’s
improved bid
for Patrick the thumbs up, although just a little more money might be
required. Mind you, the pack has often
been wrong before on the way this seven-month-long battle has meandered and
Chris Corrigan’s dogged determination should never be underestimated.

Almost lost in the fine print of the new
deal though is that Dick Branson has dropped out of the equation and won’t be
getting his hands back on Virgin Blue if Paul Little’s Toll is victorious. The original takeover bid was framed at a
time when Virgin was somewhat on the nose with investors and most analysts.

But times have changed rather suddenly and
the latest offer leaves Virgin Blue just where it is, albeit with a chance of
something happening down the track, as The SMH reports:

Toll also tore up its original
plans to unload Patrick’s 62.4% stake in Virgin Blue if its takeover
succeeded, partly via an in specie dividend of 0.3 of the airline’s shares to
each Patrick shareholder. Under the original deal, Virgin
Blue founder Sir Richard Branson was to regain management control of the
airline by buying back a 15% stake from Toll at an underwritten price
of $1.40 a share.

But Mr Little said Toll’s change
of tactics was a result of the recent recovery in the airline’s share price and
profit outlook. “It’s, from our point of
view, a better business and that’s obviously reflected in the price it’s
trading at,” he said.

Mr Little was unclear on Toll’s
plans for Virgin Blue but the removal of any deal with Sir Richard in the
takeover bid is seen as a move to focus all of the debate on the Patrick offer. Toll has made it clear it may
drive a harder bargain in handing back management control to Sir Richard.
“It’s all very hypothetical until we get control of Patrick,” he
said.

Yet Toll has not annulled the
underwriting agreement with Virgin Group.

The travelling public might well ponder
exactly why Virgin Blue is suddenly “a better business”. Fuel prices remain
high and the competition remains… oh, maybe that’s it, maybe there’s something
about an easing of competition between Virgin Blue and Qantas/Jetstar that has
suddenly made VB desirable.

It was ever thus. Left to their own
devices, two major Australian competitors will generally find a way of becoming
a duopoly one way or another.