Auckland Airport shares rebound after doubts answered

By NZPA

Thursday 11th October 2007

Auckland International Airport shares rebounded after the company tried to soothe doubts about a proposed bid from the Canada Pension Plan Investment Board (CPPIB).

The airport company has kept silent since releasing some details of the Canadian proposal three weeks ago, and told the market today that it was still assessing the "complex" plan but talks were continuing.

Following Dubai Aerospace Enterprise's failed bid for control, the CPPIB put forward three options for acquiring a significant minority stake in Auckland Airport. They included an all cash option of $3.70 per share, or two combination options providing value of up to $3.90 per share.

Auckland Airport shares have seesawed since takeover speculation became concrete in July, soaring from $2.80 before Dubai's bid to a record high $3.50 and then back again as uncertainty emerged. The shares were up 1%, or 4c, at $3.06 today.

"Auckland International Airport Limited is aware of market rumours relating to the status of discussions with the Canada Pension Plan Investment Board," Auckland Airport directors said.

"The board confirms that the proposal is still being assessed and discussions with CPPIB are continuing.

"The directors of Auckland Airport will provide an update to the market as soon as a decision has been made."

The board said in September when it received the discussion paper that it would take some time to consider the indicative proposal.

Milford Asset Management investment analyst Brian Gaynor gave the Canadian deal just a 50% probability.

He also suggested that the future of Auckland Airport director Mike Smith on the board was limited because he had been a strong backer of the Dubai bid.

"I would imagine he's been isolated on the board because the Dubai deal, which he put up and was very much his baby has not come off, because obviously Dubai walked away because they realised it wouldn't be successful," Gaynor told Radio New Zealand.

"And the Canadian deal looks like it's 50/50 at the moment rather than being 70% probability.

"If you have championed deals and they don't come off, your position on the board becomes a bit weakened," he said.

Shareholders will vote on directors at the annual meeting next month, with three major shareholders not represented on the board -- Auckland City Council, Manukau City Council and Infratil -- putting forward nominations yesterday.

Auckland Airport's board is chaired by John Maasland with other professional directors Mr Smith and Tony Frankham, plus Meridian chief executive Keith Turner and Fairfax NZ chief executive Joan Withers.

However, institutional investors were unhappy at the board's handling of the Dubai bid, in particular its recommendation of the bid while other parties were doing due diligence, and its misreading of opposition to foreign ownership by the public and the two councils.

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