KEY POINTS:
Influential holders of small stakes in Auckland Airport have spelled out reasons for taking sharply opposite courses on the Canada Pension Plan Investment Board's amalgamation plan.
Fund manager Brook Asset Management - with a stake under 5 per cent - says shareholders should heed the words of the airport's independent advisers and sell.
Infratil, which with the NZ Superannuation Fund has 7.5 per cent, says the offer isn't good enough and shareholders should wait. And the airport's board yesterday launched a national publicity blitz with a full-page advert to detail its opposition to the proposal in which CPPIB would take 40 per cent of the airport for $3.6555c a share.
Brook's Simon Botherway said the board's "somewhat perplexing" recommendation is contrary to independent advice".
"On our numbers you're not going to see $3.65 in terms of the stock price for many years, perhaps 10 years. You've got the opportunity to sell now 40 to 80 per cent of your stock at that price," he said.
Shareholders who do not accept would be at a disadvantage to those who do accept if they get approval to go to 40 per cent.
Botherway said that if the Canadian bid failed there would be no prospect of a bid paying a takeover premium for years given determination by Auckland City and Manukau City not to sell their 23 per cent combined holding. He also questioned the board's reservations about what it describes as the lack of expertise CPPIB would bring.
"If the airport is in fact missing a skill set at the board or management with respect to airports, you'd expect the board to address those issues rather than relying on an incumbent shareholder to provide that expertise."
There was no competing bid, or alternative offer. "Our strong inclination is to accept."
But Infratil executive Paul Ridley-Smith said given the bid was a partial offer, it contained serious flaws.
"Those people in a hold waiting for a capital restructure will probably be disappointed - I don't think the IRD will let it go through."
The amalgamation was aimed to re-gear the airport company balance sheet to turn equity into debt.
"You can only turn equity into debt if you've got sufficient subscribed capital or you can attach imputation credits to the redemption of the equity. Auckland has neither so it will have to face tax on that transaction."
Ridley-Smith said the Canadians brought only "patient capital".
"If money's the only issue here, then a better higher offer which won't be a partial offer will eventuate some time in the future and we'll all do better."
The languid share price of the past month or so reflected uncertainty in the short term but Infratil was confident it would rebound beyond the adviser Grant Samuel's estimate of $3.48 in the medium term.
"It just needs to show some growth beyond forecasts."
Ridley-Smith said the Canadian bid would drag into the New Year but could be trumped by a rival offer.
"I wouldn't rule out a pre-emptive full takeover offer. Clearly with shares down to a low it's a scenario that comes back into play."
The Shareholders Association is advising its members to wait until they have more information.
Corporate liaison Des Hunt said the association wanted to know from the board where another investor who could add value would come from.
"It's not going to be in their interest if they encourage people to vote it [the amalgamation] down and then find they haven't added much value in a year's time."
Auckland Airport yesterday gained a cent to $2.75.
