KEY POINTS:
Ports of Auckland owner Auckland Regional Holdings has withdrawn its backing for a merger with the Port of Tauranga - three months after discussions collapsed.
ARH chairwoman Judith Bassett said the board had decided not to support Tauranga's merger proposal, otherwise known as "Project Mako".
"With the aid
of independent advice and having regard to our statutory obligations we have resolved not to support the merger of Ports of Auckland and Port of Tauranga," she wrote in a letter to Port of Tauranga chairman John Parker.
Deputy chairwoman Joce Jesson said: "The merger doesn't align with ARH's long-term strategic investment approach for both this equity investment and ARH's total $1.4 billion investment portfolio."
The risks "outweighed any identified possible benefits in relation to ARH's long-term strategic approach for the company", she said.
Tauranga withdrew from discussions in March, with Parker blaming ARH for causing the talks to collapse. He said ARH had been unable to decide whether the merger was worth undertaking, or the terms on which it would be prepared to pursue a merger.
Tauranga chief executive Mark Cairns had stated that the merger would generate "significant financial benefits to be shared with customers and shareholders alike".
In addition to helping cut carbon dioxide emissions, a merger would have facilitated rationalisation of the country's 13 ports, for which he said New Zealand lacked the tax base to sustain funding of high-quality road and rail infrastructure connections.
However, Bassett said at the time that Tauranga's exit from formal talks did not signal an end to its analysis of the merger.
Following the ARH's decision, Parker said Tauranga's withdrawal from discussions in March had been with some reluctance "because we believe there's a very sound business case".
"We thought it would solve a whole heap of infrastructural issues and be environmentally particularly friendly."
However, he said, he was "not the least bit anxious about it" and said that Tauranga had not given the matter any thought since March 30. He noted that it was Auckland that had approached Tauranga for the merger.
Had ARH backed the merger proposal, Parker said, "our reaction would have been to look at it very carefully and hopefully with some degree of enthusiasm because on the surface it makes absolute good sense".
ABN Amro's Daniel Kieser said he didn't think ARH's decision was unexpected, However, Port of Tauranga's share price dropped 20c yesterday to close at $6.80.
Since March 31, the price has risen from $6.10 to $6.80, touching a high of $7.26 in June.
