KEY POINTS:
The end of a merger agreement between Auckland Airport and Dubai Aerospace won't necessarily leave a clear path for rival bidder Canada Pension Plan, sources on all sides of the sale process agreed yesterday.
All eyes are now on the Canada Pension Plan (CPP) Investment Board, which has indicated it will make an offer in the next few weeks, but Dubai Aerospace (DAE) is also expected to continue monitoring the sale process.
How serious DAE is about making another offer may depend on the price CPP puts on the table and whether the sale process can be pushed out past local body elections in mid-October.
"It's too valuable an asset. You never say never," said one source.
The termination of the merger deal will also have sparked the interest of other potential bidders, sources said.
A Macquarie bank-led consortium and Melbourne Airport owners Australia Pacific Airports Corporation (APAC) have had teams working on a possible airport offer in the past six months. Neither has got as far as doing due diligence, which has been done by both DAEand CPP.
In a brief statement yesterday DAE said it regretted that: "Not withstanding the efforts of the board the transaction could not proceed in the form proposed.
"DAE regrets that the opportunity to do business with AIA did not eventuate on this occasion," said Kjeld Binger, chief executive of DAE Airports.
Neither DAE representatives or the airport board were prepared to comment further.
"The key words in the statement were 'in the form proposed' and 'on this occasion'," said another well-informed source, suggesting that Dubai has left the door open to return.
After initially blaming its withdrawal on the airport board and an Air New Zealand judicial challenge of new airport fees, the parties agreed to an amicable end to the deal.
Neither side will pay a $4 million break fee that was written into the deal and each will cover their own costs.
More likely DAE realised it needed to cut its losses on the deal, which had been effectively killed off by a political storm at local body level.
DAE's offer - which it claimed was worth $3.80 a share in cash and stapled securities in a new airport company - was always going to be dependenton support.
As a scheme of arrangement the airport needed 75 per cent support from shareholders to proceed.
There have also been suggestions that DAE's Dubai-based owners may have pulled the plug after taking offence at negative comments made about the deal by Trade Minister Phil Goff.
Goff was at the Apec conference in Sydney yesterday and could not be reached for comment. He has saidpreviously that the comments reflectedhis personal views and not those of the Government.
Foreign Affairs Minister Winston Peters also expressed opposition to the deal. He has also opposed any deal with CPP.
His party celebrated the termination of the DAE deal with a press release titled: "One down, one to go."
The councils have thus far been more welcoming of CPP, which seeks only a 49 per cent stake and plans to offer the councils a governance role - most likely seats on the airport board.
CPP may still have some work to do to convince the board and other investors. It is not an airport operator and does not have any specific plans to boost earnings.
Wellington infrastructure investor Infratil - now holding a 6.2 per cent stake - was tipped as a possible partner for a council and CPP consortium.
It is likely that Infratil is still talking to CPP but the company was quick to distance itself from CPP's offer on Monday.
It has indicated that it does not consider a 49 per cent stake to be significantly different from 51 per cent in terms of being a controlling stake.
The termination did little do dampen investor hopes that a sale will proceed.
Airport shares closed down 2c at $3.07, still well up on the $2.40 range it was trading in before the market got wind of takeover rumours.
Dead deal
* The DAE deal valued the airport at $3.80 a share, the shares closed last night at $3.07.
* Negative public reaction and lack of political support sank the deal which needed to win over Manukau and Auckland city councils.
* Canada Pension Plan has said it will make its own offer in the next few weeks.
