Dubai Aerospace may drop its Auckland airport bid
01 September 2007
The UAE-based Dubai Aerospace Enterprise (DAE) may drop its proposed NZ$2.6- billion ($1.8 billion) takeover bid for Auckland International Airport. Auckland International Airport announced on 31 August that DAE has asked for ''talks'' on the airport.
DAE says New Zealand''s biggest airport isn''t doing enough to complete the deal, and it believes Air New Zealand is responsible for putting the deal in doubt. DAE had agreed to buy a controlling stake in the airport on 23 July, but is now seeking talks under a clause of the deal that allows either party to terminate the merger if no agreement is reached.
Auckland Airport shares have slumped 15 per cent since the merger was announced as its two biggest investors, who own about 23 per cent of the stock, say they would prefer control of the hub remains in New Zealand.
DAE''s proposal has been recommended by Auckland Airport''s board, but requires 75 per cent approval from shareholders. The Manukau City Council, which owns 10 per cent of the airport, has said it opposes the merger. The Auckland City Council, which owns about 13 per cent, will decide on 3 September whether to include the sale in its long-term plan.
Analysts feel DAE may be finding that wooing the shareholders is just too hard. Another bid is awaited, which is why the share price has held up. The airport company said last week that the Canada Pension Plan Investment Board has been studying its accounts, and may make a rival bid.
Prime Minister Helen Clark, her trade minister Phil Goff and the nationalist New Zealand First and Green parties, which support the present government, have all made no secret of their opposition to the deal.
DAE was established last year. It aims to become a global airport and aviation services company. It is backed by the government of Dubai, which is a major shareholder.