KEY POINTS:
The fate of a $2.9 billion takeover of Auckland Airport by a Dubai company could be decided by householders in Auckland and Manukau cities.
Dubai Aerospace Enterprise faces an uphill battle to get 75 per cent approval from shareholders.
And the Auckland and Manukau city councils will have
to decide during the political heat of October's local body elections whether to commit their combined holding of 22.8 per cent.
Shareholders will not be asked to vote on the takeover bid until November.
Dubai Aerospace is offering $3.80 a share, making Auckland City's 12.75 per cent stake worth $592 million and Manukau's 10.05 per cent worth $466 million.
Manukau Mayor Sir Barry Curtis said yesterday that he was totally opposed to a foreign company obtaining a controlling interest in the region's domestic and international airport as it was "a magnificent long-term investment for our people".
Auckland City Mayor Dick Hubbard said majority foreign ownership of the airport was an issue that had to be addressed by politicians and ratepayers.
The possible effect on Air New Zealand also needed to be considered.
Concerns about foreign ownership of assets, the potential for monopoly pricing and profits going overseas were raised by the Greens and New Zealand First, which oppose the deal.
The two mayors said the sale would become an election issue, and pledged to work together to ensure the best outcome for ratepayers.
The Dubai Aerospace plan was unanimously recommended by the airport board on Sunday after discussions with eight parties, including infrastructure and pension funds.
The board has left the door open for other offers.
Airport chairman John Maasland said the plan involved establishment of a new company, Auckland Airport Ltd, in which Dubai Aerospace would invest up to $2.9 billion and acquire 51 to 60 per cent of the business.
The plan put a value of $5.6 billion on the airport.
Dubai Aerospace is an international aerospace manufacturing and services corporation.
Mr Maasland said the $3.80-a-share offer was a premium of 55.9 per cent to shareholders on the share price on May 5, when speculation about the airport company started.
"We believe DAE will bring additional aviation and tourism development experience to the New Zealand business," Mr Maasland said.
But first the Dubai company must obtain 75 per cent shareholder approval for its offer.
Board director Mike Smith said the chances of success hinged on the support of the two councils.
If Dubai Aerospace is successful, the councils will have no choice but to sell some or all of their airport shares under the "scheme of arrangement" plan.
Sir Barry said the deal had serious implications for New Zealand. The airport was the gateway to New Zealand, the catalyst for tourism and an international hub within the Pacific.
Australia restricted foreign control of its airports and New Zealand should do the same, he said.
"This matter is of major importance to the people of Manukau City, the Auckland region and New Zealand, and I have no hesitation in expressing my opposition to a foreign company taking a controlling interest in our airport. Who knows where this could finish up?" Sir Barry said.
Since the airport was listed in 1998, Manukau has voted to keep its airport shares and has increased its holding from 9.6 per cent to 10.05 per cent.
It has received $108 million in dividends and special dividends.
Mr Hubbard said that as well as the Dubai offer, the council had received a $3.10-a-share offer from the Canadian Government's mega-pension fund, held discussions with Macquarie and believed there were more "chapters in the book" to come.
He said aspiring mayoral candidates and political groupings needed to have clear views on the issue for voters to consider at the election.
Mr Hubbard, who has floated the idea of selling airport shares, said it was too early to reach a position, except to say the shares should be sold only to pay for capital assets that would produce revenue.
Using the proceeds to pay operating costs was not on.
Auckland City has begun consulting ratepayers on general options for the shares. About 200 submissions have been received in the first week.
The centre-left City Vision-Labour ticket, with nine seats on the 20-strong Auckland council, is opposed to the sale of the airport shares.
Co-leader Vern Walsh said City Vision-Labour councillors would discuss the Dubai offer over the next few days once they had been fully briefed.
Citizens & Ratepayers Now finance spokesman Doug Armstrong said the centre-right ticket would consider the best interests of Auckland ratepayers before deciding whether to sell the shares.
Mr Armstrong, whose ticket sold half the council's 25 per cent airport stake in December 2002 for $190.8 million, said C&R Now did not regard the remaining 12.75 per cent as a sacred amount.