KEY POINTS:
Dubai Aerospace Enterprise and Auckland International Airport now have until Thursday to rescue their planned merger. But that won't happen.
Whatever DAE might say about the conditions of the merger agreement having been breached, it is clear that the Emirates-owned investor has got cold feet and doesn't want the deal to go ahead.
DAE claims two breaches - both of which are disputed by Auckland Airport.
First, it says Air New Zealand's legal action against the airport over landing fees is a "Prescribed Occurrence", meaning that DAE and Auckland Airport have five business days to renegotiate the merger or either party can call it off.
But to suggest that Auckland Airport and Air New Zealand squabbling over landing fees is "a material adverse change in the financial position, trading operations or prospects or assets of AIAL" - as is required to nullify the agreement - is laughable.
That airlines and airports will argue over landing fees is as predictable as the All Blacks caving in under pressure when it really counts.
DAE says it has the sharpest team of airport operators there is - and yet they claim to be surprised by the latest ploy by Air New Zealand.
DAE's second claim is that Auckland Airport is "not using its best endeavours to ensure a successful outcome to the proposal". There's so far been no indication that Auckland Airport hasn't made its best attempt to ensure the merger proceeds. But the agreement document is sufficiently broad that finding an example of how either party hasn't used its "best endeavours" wouldn't be too difficult.
In theory Auckland Airport and DAE now have five business days from Thursday to either determine whether the deal could "proceed by way of alternative means or methods" or to extend the date.
But it's hard to see the Auckland Airport board being prepared to renegotiate the deal if it doesn't accept the agreement has been breached.
And the spurious reasons DAE has cited as evidence of a breach suggest that it won't be negotiating in good faith.
It's hard to draw any other conclusion than DAE wants out of the deal. But it's not clear why.
Perhaps DAE decided it was going to be too difficult to win over Auckland and Manakau councils, the two shareholders whose votes could sink the merger. And the hostile reaction it received from the Government is unlikely to have made it feel more confident about investing billions of dollars in New Zealand.
Perhaps DAE thought it would pursue Gatwick Airport instead, as suggested by recent international press reports.
Or perhaps DAE has decided it could get the airport cheaper following the global liquidity crisis.
With backing from the United Arab Emirates, DAE has a bottomless pit of money. But other interested bidders might be reconsidering whether they're still prepared to pay what is considered to be a huge price for the airport now that the cheap funding has dried up.
DAE might be hoping for a bargain. But with Canada Pension Plan Investment Board - who are also well cashed up - waiting in the wings to make a bid of its own, winning the airport for much below its $3.80 a share cash and scrip bid is unlikely.
* Christopher Niesche is business editor of the Herald
