KEY POINTS:
Outspoken fund manager Simon Botherway, of Brook Asset Management, has slammed would-be Auckland Airport buyer Canada Pension Plan Investment Board (CPPIB) for the way it disclosed details of its upcoming offer.
"The Canadians' release of partial information about a proposed merger deal with AIA was cavalier and demonstrated a disregard for the sound functioning of the NZ listed equity market," he said yesterday.
CPPIB has now made two separate disclosures relating to its proposal, without actually making a formal offer.
On Wednesday it went public with the pricing details just a day before it was scheduled to outline the proposal to the airport directors.
It is understood the board and the CPPIB team met yesterday but neither party would disclose details of discussions.
CPPIB has said its offer will include three options for shareholders.
One is a cash offer of $3.70 per share; the other two involve a mix of cash and shares in a new airport company which would be structured to "provide enhanced returns while preserving the investment grade rating". The second two options would provide value up to $3.90 a share - 10c a share more than the value of the failed offer by Dubai Aerospace.
The move surprised the market - coming just a day before a scheduled meeting with the Auckland Airport Board.
Botherway - who manages a sizeable but undisclosed airport stake - described the move as a "stunt" to put pressure on the board.
CPPIB was not prepared to comment on the criticism. In a statement on Wednesday it said it was forced to disclose pricing because of ongoing speculation and market activity.
It is understood CPPIB had picked up on buying activity on the market by a potential rival and felt it needed to inform the market about what it was prepared offer.
Market commentators said yesterday that Wellington Airport owner Infratil was the most likely buyer.
Since the initial DAE bid was made in July, Infratil has grabbed a 6.2 per cent stake in Auckland Airport and put itself in a powerful strategic position.
Botherway has suggested the CPPIB disclosure issue could be something the Takeovers Panel needed to take a look at.
It is understood the NZX was concerned about the way the CPPIB disclosure was handled.
NZX head of markets Geoff Brown would not comment directly on Botherway's remarks.
"Clearly we'd like to see announcements that impact on listed issuers in New Zealand disclosed to the market so we have a fully informed market," Brown said.
Another fund manager, Rickey Ward of Tyndall Investments, said he could understand that there might be some disappointment about the fact not all the information about the offer was available.
Ward said he didn't have a problem with any particular airport owners as long as they had the best interest of all shareholders. But he expressed reservations about the possible involvement of Auckland City and Manukau City at a board level. CPPIB has indicated it may be prepared to offer board seats to the councils.
Analysts yesterday said the all-cash offer of $3.70 looked attractive.
Goldman Sachs JBWere analyst Marcus Curley said the cash price - representing a multiple of 19 times ebitda - was a "fairly good price" when compared with other airport transactions of major minority stakes.
"It looks pretty compelling for the amount of shares which they are buying and hence is likely to see support from both the company and most likely shareholders, depending on the final structure," said Curley.
However, there was still a large amount of detail to be revealed relating to what shareholders would receive outside of the cash component, he said.
"A large proportion of the value that shareholders will have is actually in the new business or the restructured company," said Curley.
"That's why it's very difficult for institutions to really make an assessment until the remaining parts of the deal are announced."
One analyst warned that with the majority of the shares locked up, any future corporate activity was firmly off the agenda - sending the share price down to around $2.50.
With shareholders likely to be able to sell only a portion of their holding at $3.70 and have the remainder worth around $2.50, they would need to weigh up whether to offload some or all now.
Auckland Airport shares closed down 5c at $3.25 yesterday.
The proposal
* Shareholders will be offered three options.
* A cash option of $3.70 per share.
* Two options will include a mix of cash and securities with a value of up to $3.90 a share.
* All three options could be subject to some scaling, depending on shareholder uptake.
* CPPIB has said it will not seek more than a 49 per cent stake in the airport.
