KEY POINTS:
The Auckland Airport board rejected Canada Pension Plan's buyout proposal yesterday despite the deal being recommended by two independent advisers.
Preliminary reports by valuation expert Grant Samuel and the airport's investment bank, First NZ Capital, both recommended the deal, which would have seen the Canada Pension Plan Investment Board (CPPIB) pay up to $3.90 a share for a minority stake in the company.
The decision not to put the scheme-of-arrangement-style proposal to shareholders divided the board, which voted four to one against putting it to the vote. Director Mike Smith was the sole supporter of the deal.
With no other bidder waiting in the wings, the decision effectively leaves the airport's ownership structure back at the status quo after a highly politicised six-month sale process which began with an offer from Dubai Aerospace.
Shares in the company dropped 24c within minutes of the board announcement. They bounced back later to close down 21c at $2.87.
Given the recommendation of the independent advisers and the subjective nature of some of the issues, shareholders ought to have made the decision, Smith said yesterday.
But board chairman John Maasland said the risks associated with the deal were too high.
Both said the boardroom debate had been robust but remained professional and amicable.
CPPIB - which has spent millions of dollars working on the Auckland Airport deal - is understood to have been shocked at the decision.
In brief official statement, the CPPIB said it was "disappointed" with the decision and that it was in the process of considering all options.
A number of institutional shareholders also expressed disappointment yesterday.
Fund manager Simon Botherway of Brook Asset Management said the decision would put the acid on the board to deliver for shareholders.
"Given the price appeared to be at least equivalent to the DAE proposal, you would have expected it at least to have been put to shareholders," he said.
Other institutional stakeholders said they would be looking for an alternative plan from the board.
"I can't say we have a plan B or plan C," Maasland said.
The strategy, which was begun a year ago, was to grow the airport and possibly to look at opportunities outside the Manukau site.
"Those are things I still believe we can do," he said.
"You could say we're back at the status quo, but who knows."
Ten prospective buyers had looked at the airport in the past six months.
"Some of them went away. I don't know whether they went away for good or not."
Speculation continues to swirl around the intentions of Wellington Airport owner Infratil, which, in partnership with New Zealand Superannuation Fund, holds a 6.2 per cent stake.
The infrastructure company expressed an interest in buying the airport at initial talks. It did not get as far as doing due diligence.
Airport shareholders will vote on new directors at the annual general meeting on November 20.
Infratil chief Lloyd Morrison has put his name forward as a candidate.
"I don't mind if Lloyd wants to put a deal up as long as it's at proper value," Smith said.
Smith, who was also a supporter of the failed Dubai Aerospace bid, has indicated he will step down after nine years on the board. Yesterday he stressed that was a decision he had made last year.
Joan Withers steps down by rotation but has indicated that she will stand for re-election
Auckland City Council, which holds a 12.75 per cent stake, has nominated Richard Didsbury, and Manukau, which holds a 10.5 per cent stake, has put forward John Brabazon.
