KEY POINTS:
A Dubai company is set to take over Auckland International Airport.
The airport's directors are unanimously recommending a deal under which Dubai Aerospace Enterprise would acquire between 51 per cent and 60 per cent of the airport business.
Under the proposal, airport shareholders would receive value of up to $3.80 per share, the airport directors said.
The decision to recommend the transaction was reached in the absence of a superior proposal.
Airport board chairman John Maasland said the proposal involved an amalgamation and the establishment of a new company, Auckland Airport Ltd, in which Dubai Aerospace would invest up to $2.6 billion.
Dubai Aerospace was a global aerospace manufacturing and services corporation seeking to become a major player in the international aerospace industry.
Airport shareholders would be asked to vote on the proposal at a meeting in November.
Mr Maasland said there had been a significant increase in interest in the airport from a wide range of parties including infrastructure and pension funds in recent months.
"This level of interest is not surprising, given that Auckland International Airport is the only stand alone listed asset of its kind in Australasia and is widely recognised as a well managed and highly efficient operation," he said.
If the proposal was approved by shareholders and completed, the airport and Dubai Aerospace would enter a co-operation agreement.
Under that agreement, Dubai Aerospace confirmed its commitment to enhance the airport's existing business, and working with the airport to pursue new opportunities beyond the existing airport site.
"We believe DAE (Dubai Aerospace) will bring additional aviation and tourism development experience to the New Zealand business. This partnership should deliver significant benefits to the company and New Zealand tourism as a whole," Mr Maasland said.
The offer gave airport shareholders a range of options to achieve an equivalent value of up to $3.80 a share.
That represented a premium to shareholders of 55.9 per cent to the average trading price over a one month period before May 5, when takeover speculation around the company arose.
The offer represented an enterprise value for the airport of $5.6 billion.
The base proposal was for shareholders to receive $2.34 cash per share, a new stapled security (share plus loan note) in Auckland Airport Ltd plus a final fully imputed dividend from the present airport company of 7c a share.
Shareholders could elect a preference to take more stapled securities and less cash, or more cash, the airport said.
The final allocation of cash or stapled securities for those shareholders electing out of the base proposal would be on a pro rata basis and would depend on the composition of all shareholder elections.
Dubai Aerospace was providing an additional pool of up to $312.75 million for those airport shareholders who wanted more cash and whose preference was not initially met.
From that additional cash Dubai Aerospace would acquire stapled securities at $1.39 per security, the airport said.
That increased the ability of those shareholders who elected the "more cash" offer to be satisfied and could see Dubai Aerospace's shareholding increase to a cap of 60 per cent.
Auckland Airport Ltd would be listed on the New Zealand and Australian stock exchanges as the present airport company was.
Under the Merger Implementation Agreement, the airport board was not restricted from considering competing proposals from other parties and making a recommendation to shareholders if the board believed another proposal would provide a better outcome for shareholders, the airport said.
In those circumstances, the board had the ability to terminate the merger agreement after consultation with Dubai Aerospace.
Dubai Aerospace chief executive Bob Johnson said the airport would be a cornerstone investment for his company and as such, would receive Dubai Aerospace's considerable support to continue to successfully develop the business on the globally stage.
The deal is subject to approval from 75 per cent of airport shareholders and also needs approval from the Overseas Investment Office.
Shares in Auckland Airport closed at $3.31 on Friday, having been as low as $1.91 last August, and up to $3.35 last month.
SO WHO IS DUBAI AEROSPACE?
Dubai Aerospace Enterprises (DAE) was established in the Gulf state in February 2006.
The company's stated goal is to build a global aerospace, manufacturing and services corporation.
Based in Dubai, "the fastest growing city in the world" economically, as its promoters call it, DAE is determined to position itself at the leading edge of the aerospace industry.
Rich with funds and acquisition-hungry, DAE has created a corporate structure spanning everything from research and development to manufacturing, maintenance, repair and overhaul, aircraft leasing and aerospace services.
Acquiring airport assets is the goal of one of the six divisions of the company. The Auckland deal, if successful, would be their first strategic move in this direction.
- NZPA, NZHERALD STAFF
