Dubai Aerospace bids for control of Auckland Airport


Wellington : A Dubai bid to take over Auckland International Airport – the main gateway for 2.4 million tourists who visit New Zealand every year – encountered opposition Monday, with critics of the deal saying it would not succeed without a fight to keep it in local hands.

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This became clear within hours of an announcement that Dubai Aerospace Enterprise (DAE) was bidding to acquire a controlling interest in New Zealand's biggest aviation hub.

The directors of Auckland International Airport Limited (AIAL) said they unanimously recommended acceptance of DAE's offer, worth 2.6 billion New Zealand dollars (about $2 billion), which would give it 51 to 60 percent of the company.

Winston Peters, foreign minister and leader of the nationalist New Zealand First party, condemned the proposal, citing the need to preserve the country's security.

"This is a very strategic asset and why would we want to give it to foreign ownership?" he said.

The Green Party, which also supports the centre-left coalition government, issued a statement questioning how a foreign corporation would use the country's biggest single aviation asset.

"Will it be used to advance the interests of the tourist industry nationally or as a cash cow adding to our current account deficit as profits are repatriated overseas?" the Greens said in a statement.

And Sir Barry Curtis, mayor of the Manukau City Council, whose residents own a critical 9.54 percent of the airport in their municipality, told Radio New Zealand he was totally opposed to foreign control.

Dick Hubbard, mayor of Auckland city, whose residents hold the biggest single stake with 12.73 percent of the company's shares, ruled nothing out, having told the Sunday Star Times a day earlier that he had no concerns about selling to an Arab entity.

Prime Minister Helen Clark also dismissed security concerns, telling her weekly news conference that moves to privatise shareholdings in a public asset always provoked debate. She noted that a sizeable part of the company – reported to be 37 percent – was already in foreign ownership.

Under the deal DAE will pay AIAL shareholders up to 3.80 New Zealand dollars a share in cash and securities, 49 New Zealand cents higher than Friday's closing price on the New Zealand Stock Exchange and a premium of 55.9 percent on the average trading price over the month prior to May 5, when takeover speculation began.

Directors said the offer valued AIAL at 5.6 billion New Zealand dollars.

Speculation about a takeover was sparked when the Canada Pension Plan Investment Board offered the company's two biggest shareholders – the Auckland and Manukau city councils – 3.10 New Zealand dollars a share for their 22.27 percent holding.

The councils had been considering selling their shares because returns had been below expectations.

The directors said they recommended acceptance of the DAE deal in the absence of a superior proposal, but the merger agreement allows them to opt out and accept a better offer should one materialise.

Shareholders will vote on the proposal in November.

John Maasland, chairman of AIAL, said that DAE was a global aerospace manufacturing and services corporation that was seeking to become a major player in the international aerospace industry.

"We believe DAE will bring additional aviation and tourism development experience to the New Zealand business," he said. "This partnership should deliver significant benefits to the company and New Zealand tourism as a whole."

The deal is subject to acceptance by 75 percent of shareholders and approval of the Overseas Investment Office.