KEY POINTS:
Canada Pension Plan Investment Board (CPP) today submitted its formal bid for 39.53 per cent of Auckland International Airport (AIA) at $3.6555 (correct) per share cash.
The offer through its subsidiary, NZ Airport, values AIA at $4.45 billion.
It is a similar proposal to the one rejected by the board as too risky as it would triple AIA's debt.
NZ Airport already owns 9.5m AIA shares, and with these would would own 40 per cent of the company. The offer closes on March 13.
AIA shares closed yesterday at $3.04.
Some institutions indicated the CPP bid would be well received but Infratil, which with The NZ Superannuation Fund has an 8 per cent stake, strongly opposes the bid as too low for one that effectively gives it control.
CPP said it resubmitted its proposal as a result of lobbying by larger shareholders.
It is unclear whether the proposal will be discussed at the AIA shareholder meeting on Tuesday. The bid will not be on the agenda and can only be raised as general business or at chairman John Maasland's discretion.
As well as concerns about increasing risk by raising debt levels, Mr Maasland criticised CPP as bringing little to the table in terms of airport management and airline connections.
But CPP disputes this, saying it has wide experience in airport management while the fund with $C120.5 billion ($170b) in assets had many connections in the aerospace industry.
If it succeeds, CPP wants to restructure AIA and increases its gearing ratio. It accuses AIA of having an inefficient capital structure by running its gearing ratio too conservatively.
Auckland City, which owns 12.75 per cent and Manukau City, which owns 10.5 per cent, each have said they will not sell their stakes.
The AIA board said it was evaluating the offer and was seeking the Takeovers Panel's approval to the appointment of an independent adviser.
It noted the offer will be subject to a number of conditions, including shareholder approval.
The takeover offer is expected to be mailed to shareholders on Friday, December 14.
The board said details of the board's views on the offer would be included in the Target Company Statement which was also expected to be mailed to shareholders before Christmas. This would include a copy of the independent adviser's report.
The board has also asked its financial advisers to seek all other takeover offers for the company.
Mr Maasland said that the directors wanted to make sure all interested parties were aware of the opportunity to take a stake of this nature in the company.
The board believes potential investors in Auckland Airport have had extensive opportunities to express their intentions in relation to the company -- especially as Auckland Airport had made the details of a specific proposal available to the market.
"While we have had discussions with more than 10 parties over the past 18 months, covering a range of local and international entities, these discussions were largely on the basis of a restructuring rather than a takeover," he said.
"Now that we have received a formal takeover notice from NZ Airport, in the interests of shareholders we want to ensure that all parties have an opportunity to consider this approach."
Directors recommend that shareholders await the takeover offer being made and full details of the company's assessment of the offer, including the board's recommendation and the independent adviser's report, before taking further action.
- NZPA
