UAE firm eyes Kiwi airport stake
Tuesday, July 24, 2007
STATE-BACKED Dubai Aerospace Enterprise Ltd offered to pay up to NZ$2.6 billion ($3.13740 billion) for a controlling stake in New Zealand's Auckland International Airport Ltd, which was backed by the airport's board, sending its shares up around 5 per cent yesterday.
Under the offer, which values the whole of Auckland Airport at NZ$5.6 billion, a new company will be created, in which the United Arab Emirates (UAE) firm will have a stake of 51 to 60 per cent. Dubai Aerospace Enterprise was set up last year by the government of Dubai and other interests.
But the bid faces growing political opposition, and analysts said a counter-offer could be forthcoming given the high level of interest in one of the country's busiest airports.
"There are other parties sniffing around, and Auckland Airport can get out of this if they get a better deal, so I'm not sure this is the end game yet," said Walker Capital Management principal Craig Brown.
Auckland Airport has been the subject of renewed takeover speculation since May, when Australia's Macquarie Airports was reported to have tried to enlarge its small stake.
Airport assets globally have been drawing investors because of their stable, long-term revenue streams, fuelled by a boom in air travel.
The board of Auckland Airport, while backing the Dubai Aerospace Enterprise deal, said it is not restricted from considering other offers.
Auckland Airport shareholders will be offered NZ$2.34 in cash per share, a share in a new airport company with a convertible loan note attached, and a special dividend of 7 cents per share.
The offer gives an equivalent value of NZ$3.80 a share, a 15 per cent premium to the stock's closing price on Friday.
The airport operator is one of New Zealand's top 10 firms.
The offer is conditional on 75 per cent shareholder approval and will be voted on in November.
The firm also warned its full-year profit would be 10 per cent lower between NZ$91 million and NZ$92 million because of higher staff incentive payouts.
The deal also will need approval from New Zealand's Overseas Investment Board.
The economic nationalist NZ First Party, which supports the minority Labour-led coalition government, opposes the sale. Its leader, Winston Peters, said the airport was a plum asset and it was not in New Zealand's interests for it to be sold off.
Dubai has run into political hurdles with other deals. Last year, Dubai Ports World was forced to sell US port assets it bought as part of a takeover of Britain's P&O after US lawmakers said they had security concerns about the Arab state-owned firm operating key infrastructure.
Auckland Airport said last month it was talks with investors wanting to buy a stake, after several shareholders rejected a NZ$3.10 a share approach from the Canada Pension Plan Investment Board.
The Canadian fund has been reported as still interested, while Spanish roads-to-services group Ferrovial , which owns BAA UK airports business, has also been tipped as a suitor.
Reuters
Under the offer, which values the whole of Auckland Airport at NZ$5.6 billion, a new company will be created, in which the United Arab Emirates (UAE) firm will have a stake of 51 to 60 per cent. Dubai Aerospace Enterprise was set up last year by the government of Dubai and other interests.
But the bid faces growing political opposition, and analysts said a counter-offer could be forthcoming given the high level of interest in one of the country's busiest airports.
"There are other parties sniffing around, and Auckland Airport can get out of this if they get a better deal, so I'm not sure this is the end game yet," said Walker Capital Management principal Craig Brown.
Auckland Airport has been the subject of renewed takeover speculation since May, when Australia's Macquarie Airports was reported to have tried to enlarge its small stake.
Airport assets globally have been drawing investors because of their stable, long-term revenue streams, fuelled by a boom in air travel.
The board of Auckland Airport, while backing the Dubai Aerospace Enterprise deal, said it is not restricted from considering other offers.
Auckland Airport shareholders will be offered NZ$2.34 in cash per share, a share in a new airport company with a convertible loan note attached, and a special dividend of 7 cents per share.
The offer gives an equivalent value of NZ$3.80 a share, a 15 per cent premium to the stock's closing price on Friday.
The airport operator is one of New Zealand's top 10 firms.
The offer is conditional on 75 per cent shareholder approval and will be voted on in November.
The firm also warned its full-year profit would be 10 per cent lower between NZ$91 million and NZ$92 million because of higher staff incentive payouts.
The deal also will need approval from New Zealand's Overseas Investment Board.
The economic nationalist NZ First Party, which supports the minority Labour-led coalition government, opposes the sale. Its leader, Winston Peters, said the airport was a plum asset and it was not in New Zealand's interests for it to be sold off.
Dubai has run into political hurdles with other deals. Last year, Dubai Ports World was forced to sell US port assets it bought as part of a takeover of Britain's P&O after US lawmakers said they had security concerns about the Arab state-owned firm operating key infrastructure.
Auckland Airport said last month it was talks with investors wanting to buy a stake, after several shareholders rejected a NZ$3.10 a share approach from the Canada Pension Plan Investment Board.
The Canadian fund has been reported as still interested, while Spanish roads-to-services group Ferrovial , which owns BAA UK airports business, has also been tipped as a suitor.
Reuters
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