1:16 PM Apr 11, 2008
Giles Parkinson

Airport bid grounded



The battle for control of Auckland Airport has kept Kiwi eyebrows in an almost permanent state of elevation these past few months, but the two thuds just heard from across the Tasman were the sound of jaws dropping onto the desk, and of Auckland Airport shares dumping $NZ600 million in value.

Earlier today, the NZ Government scuttled a partial bid from the $US120 billion Canadian Pension Plan Investment Board. The decision was not unexpected, as the government had moved the goalposts near the end of the game by rushing through changes to the Overseas Investments Act.

But even after those alterations, the Overseas Investment Office decided that the “benefit to New Zealand” criteria had been met. Not good enough for the government, it seems, which ruled that it couldn’t agree that the benefits were “substantial and identifiable”, and blew the whistle on the whole deal.

CPP, advised by UBS, had wanted to buy 40 per cent of Auckland Airport for $NZ1.8 billion, and had even offered to dilute its voting stake to 25 per cent to meet local concerns.

Opposition was strong from the two local councils – Auckland and Manukau – that together own around 23 per cent of the airport, but other shareholders were happy to sell into the proposal. Indeed, about 63.5 per cent of the stock had been sold into the offer and the deal had won approval from 58 per cent of shareholders in a vote.

The airport, which is receiving advice from First NZ Capital and Credit Suisse, says it will continue its search for a cornerstone investor, but after the failure of this offer and the previous bid by Dubai Aerospace, it will be surprising if anyone else will be willing.

Shareholders can feel aggrieved. The Dubai offer had been pitched at $NZ3.80 a share, and the CPP offer at $NZ3.59. The government ruling leaves the airport shares stranded around $NZ2.20 – about a $NZ600 million loss of value for those investors planning to sell into the offer.


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