KEY POINTS:
At least three potential bidders now have their sights set on a takeover of Auckland International Airport.
After several weeks of speculation, the airport effectively declared itself in play yesterday, revealing that Canada Pension Plan (CPP) - a Canadian Government-owned fund managing more than $144 billion of retirement savings - had offered institutional shareholders $3.10 a share.
The airport's directors said they were in discussions "with parties" including CPP.
It is understood that Macquarie Airports - which sparked initial speculation when it tried to buy shares from institutional shareholders last month - is not one of the parties that airport is talking to at this stage.
Macquarie Airports was the focus of further conjecture last week, after analysts at UBS suggested it might use cash from the sale of its stake in Rome Airport to make a play in Auckland.
The identity of a third likely bidder - which is understood to be in discussions with the airport - remained unclear last night.
Auckland Airport director Mike Smith said the board felt obliged to disclose the CPP interest when it became aware that a $3.10 offer had been made to institutions.
It was too early to disclose the names of any other bidders and talks were all at very early stages, he said.
The $3.10 offer had been rejected by the institutional shareholders and no formal takeover offer had yet been made by CPP, he said.
Some market watchers are sceptical that potential suitors will be able to convince key stakeholders Auckland and Manukau City Councils to part with their strategic holdings.
But it is understood that CPP at least is committed to the concept of the airport retaining significant New Zealand ownership. That would suggest the Canadians may be prepared to deal with the councils as strategic partners.
Other bidders may have to structure offers in a similar way in order to secure majority control of the airport.
Outside of the Auckland and Manukau cities - which own 12.75 per cent and 10.05 per cent respectively - the share register is wide open, with investment bank UBS at about 11 per cent and Commonwealth Bank of Australia at 7 per cent, the only other substantial shareholders.
Despite its offer being knocked back by institutional investors, CPP has successfully engaged both councils in talks about their shareholdings.
Both said yesterday that they were considering the approaches.
Auckland's finance committee chairman Vern Walsh said the council was "aware that other parties are interested in Auckland Airport, and we need to be prepared for any other proposals we receive".
Manukau Mayor Barry Curtis played down the chances of his council selling out. "We are a long-term holder of the airport shares, we see it as a strategic investment."
Because Auckland Airport is deemed to be a strategic asset, any council decision to sell would require public consultation.
The prospect of competing offers sent Auckland Airport shares soaring to record heights yesterday.
They were up 48c to $3.30 at one point before easing back to close up 38c at $3.20.
A Macquarie Equities research report yesterday estimated that a price of $3.50 to $4 would be needed to take control of the airport - if there were rival bidders. The news about CPP would have "reignited" Macquarie Airports' interest, the report said.
Macquarie Airports (a separate entity from NZ-based Macquarie Equities) declined to comment yesterday.
Canadian player
* Canada Pension Plan is a state-owned fund managing $144 billion.
* Despite being state owned it is a proactive investor. It has set up its own private equity funds to buy assets and has partnered with aggressive takeover players.
* It is currently part of a consortium, led by US private equity firm KKR, involved in a US$32 billion takeover battle for Canada's largest telco, BCE.
* It has also worked in the past with Macquarie Infrastructure Fund in Europe.
