Canada bids again for Auckland Airport

[Dave Homewood]

nz.news.yahoo.com/071106/3/2biz.html

Wednesday November 7, 11:14 AM
Canada relaunches partial bid for Airport


Canada Pension Plan Investment Board has launched another partial takeover for Auckland International Airport (AIA) -- this time for 40 percent cash at $3.6555 per share, a spokeswoman said today.

Its earlier bid for between 39-49 percent was rejected by a majority of the AIA board late last month because it would have increased the company's risk exposure by tripling debt.

That bid valued the entire company at $4.8 billion while today's bid values it at $4.45 billion.

CPP said today's bid was the equivalent of the earlier price of $3.70 if a 4.45 cent dividend was taken into account. The spokeswoman said the bid price was at a 63 percent premium on AIA's price before Dubai Aerospace Enterprise's (DAE) made its failed bid in July.

Yesterday, it was revealed The New Zealand Superannuation Fund and infrastructure investor Infratil had increased their combined stake in Auckland Airport to just under 8 percent from around 6 percent.

That stake will make it more difficult for a foreign buyer to get control of the airport without dealing directly with Infratil managing director Lloyd Morrison who is attempting to win a board seat.

They increased their stake by 1.8 per cent - or about 22 million shares - in the six days following the airport board pulling the plug on sale talks with CPP.

The NZ Super Fund uses private institutions to buy and hold shares on its behalf. The increase in its holding was declared yesterday and showed it now owns a 5.07 per cent stake - held on its behalf by Barclays Global Investors, AMP Capital Investors, Brook Asset Management, Smartshares and Morrison & Co. (the investment company of Lloyd Morrison, who also controls Wellington-based Infratil).

CPP said if its latest bid was successful it would then enable its amalgamation proposal to be put to shareholders for consideration.

"In the past few days, we have received strong encouragement from AIA shareholders that they would like the opportunity to consider our proposal directly.

"Like us, they believe that our proposal is one that is in the interests of all AIA stakeholders.

"As a result, we have decided to take steps to enable CPP's proposal to be put directly to shareholders," CPP senior vice president Mark Wiseman said.

Yesterday, it was revealed The New Zealand Superannuation Fund and infrastructure investor Infratil had increased their combined stake in Auckland Airport to just under 8 percent from around 6 percent.

That stake will make it more difficult for a foreign buyer to get control of the airport without dealing directly with Infratil managing director Lloyd Morrison who is attempting to win a board seat.

They increased their stake by 1.8 per cent - or about 22 million shares - in the six days following the airport board pulling the plug on sale talks with CPP.

The NZ Super Fund uses private institutions to buy and hold shares on its behalf. The increase in its holding was declared yesterday and showed it now owns a 5.07 per cent stake - held on its behalf by Barclays Global Investors, AMP Capital Investors, Brook Asset Management, Smartshares and Morrison & Co. (the investment company of Lloyd Morrison, who also controls Wellington-based Infratil).

CPP said if its latest bid was successful it would then enable its amalgamation proposal to be put to shareholders for consideration.

"In the past few days, we have received strong encouragement from AIA shareholders that they would like the opportunity to consider our proposal directly.

"Like us, they believe that our proposal is one that is in the interests of all AIA stakeholders.

"As a result, we have decided to take steps to enable CPP's proposal to be put directly to shareholders," CPP senior vice president Mark Wiseman said.

CPP said its preferred course was for the AIA Board to put its proposal in front of its shareholders.

"The step we are now taking in no way detracts from our desire to work with the company and its management team to further the growth and development of the airport's business," Mr Wiseman said.

When the AIA board rejected the first proposal it did not disclose all details of the CPP bid.

Because it is a partial bid, it will be conditional on the approval of over half the AIA shareholders.

CPP said that if successful it would do its utmost to place the amalgamation proposal before shareholders as soon as possible.

Also it would as soon as practicable, give shareholders its formal takeover notice.

AIA shares closed yesterday on $2.91 -- 25 percent below today's offer price.

AIA shares were placed on a trading halt by the Stock Exchange.

AIA was not immediately available to comment.

When the trading halt was lifted, AIA shares shot up 12 percent, or 35 cents, to $3.26.

CPP said if its bid was successful, the company would still be more than 50 percent owned.

Auckland City owns 12.75 percent and Manukau City owns 10.5 percent.

UBS owns 6.6 percent, Commonwealth Bank of Australia 6.3 percent and Macquarie 4.98 percent.

AIA holds its annual meeting on November 20 where a battle is expected for board seats with Auckland City, Manukau and Infratil all putting up nominees.

[rotoruian]

This group has A LOT of money to spend, It will be interesting to see how it plays out. Over here they're calling it a hostile takeover bid on one radio report I heard.

[Dave Homewood]

Hostel or hostile?

;D

[rotoruian]

ooops typo fixed

[andyc]

www.airtransportnews.aero/cgi-bin/article.pl?mcateg=&id=7419



Andy

[corsair67]

From The Australian.


Auckland Airport supports Canadian bid
Symon Ross, Dow Jones Newswires | February 25, 2008.


THE board of Auckland International Airport today recommended shareholders sell their shares into the partial takeover offer from Canada Pension Plan Investment Board, reversing its earlier position advising rejection of the offer.

"All directors acknowledge that the market conditions have changed significantly since this bid was announced and this key factor has given rise to the need for directors to update their earlier recommendations," chairman Tony Frankham said in a statement.

CPPIB has offered $NZ3.6555 ($3.20) a share to gain a 40 percent stake in New Zealand's largest airport. The bid, which closes on March 13, requires acceptance from shareholders with 39.2 per cent of the company and a majority vote in favour of it becoming a 40 per cent shareholder.

While it recommended shareholders sell into the offer, Auckland Airport said the majority of its board members are maintaining their recommendation to vote against CPPIB acquiring the 40 per cent stake, believing shares will be worth more in the long-term without CPPIB's involvement.

[flyjoe180]

Auckland City's mayor John Banks says the "writing is on the wall" for his council's crucial decision on the Canadian bid for a stake of Auckland International Airport.

Shares in the airport yesterday plunged 38c to $2.45 on the back of speculation the partial takeover could fail after tax law changes.

The city council holds a 12.74 per cent stake of the airport and its vote on whether the deal should go ahead is seen as pivotal.

The bid by the Canada Pension Plan Investment Board hit a major obstacle on Monday night after the Government closed a tax loophole that formed the basis of a proposed amalgamation, if the offer is successful.

Although Auckland City was never going to sell its shares, councillors will on March 12 vote on whether the bid should go ahead.

"I cannot speak for my colleagues but the writing is on the wall. The outcome has always been for Auckland City, inevitable."

Canada Pension planned to issue investors with so-called stapled securities in a new airport company, made up of a fixed- income note and a share.

The retrospective law change prevents companies using stapled securities to pay tax-deductible interest to shareholders instead of dividends, which could have cost hundreds of millions of dollars in lost tax if they had become common.

Banks said the plan "was flawed from day one" and he had advised the Canadians of this.

"Consequently my personal point of view was that while it had some appeal to mum and dad investors it had no appeal to long term shareholders like Auckland City or Manukau City."

If the stapled security scheme had gone ahead as planned the council stood to make an extra $15 million to $20 million a year on top of its annual airport dividend of $12 million a year.

In spite of the setback from the tax law change CPPIB said it would proceed with its bid.

CPPIB said that the stapled securities were only to be issued under the proposed amalgamation, which would be considered by the Auckland Airport board and shareholders after completion of the partial takeover.

The board said: "It has always been CPPIB's intention for any amalgamation proposal to be implemented with IRD approval through a binding ruling. CPPIB intends to monitor the progress of the proposed taxation changes and will be consulting with IRD on the details of the proposed changes."

Simon Botherway of Brook Asset Management - which holds airport shares and is a staunch supporter of the Canadian bid - said the tax ruling made the bid more compelling.


Other bidders would be deterred after the ruling in the future meaning shareholders should take the money on offer now.

The Canadians may have considered pulling the bid but he did not believe there was an out for them, Botherway said.

"The irony here is that we've sold any number of businesses internationally and here we are with a credible buyer fronting up with a huge price and we're trying to reject it. It's offensive really."

Macquarie Equities New Zealand investment director Arthur Lim said the amalgamation plan could be reconfigured.

"There are other ways of doing it but they wouldn't be as tax efficient."

CPPIB has said it met Auckland City and Manukau City representatives about once a fortnight to update them on its bid

The council's stance meant the hurdle to get 50 per cent backing had got higher.

"Shareholder fatigue" was setting in, but "if they don't get this transaction through the Canadians could come back with an offer for 20 per cent with a much lower price," Lim said.

The airport board on Monday recommended shareholders sell their shares but vote against the present deal.

www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10494789