Port deal will be three-way split

Ports of Auckland would probably end up owning just a third of the super-port to be created if it goes ahead with the planned merger with Port of Tauranga, says a source with knowledge of the deal.

Auckland Regional Holdings and Environment Bay of Plenty - the local regional council - would each own around a third of the new body, which will remain listed on the NZX.

The remaining third would be liquid stock owned by private investors, mainly consisting of minority Port of Tauranga shareholders, says the source.

It is understood the two ports are considering this as the most likely ownership model for a merger.

Ports of Auckland and Port of Tauranga announced last week they were discussing a merger.

Auckland Regional Holdings - which took full ownership of Ports of Auckland and removed it from the sharemarket last year - will end up owning less of the new venture because Ports of Auckland's valuable waterfront land is not part of the deal.

This would mean that the new super-port would be majority-owned by the present owners of Port of Tauranga.

Port of Tauranga chief executive Mark Cairns said yesterday the deal had to be a merger of equals, with the intention that the regional councils would have equal shareholdings. But he declined to comment on each party's ultimate level of ownership.

To complete the transaction, Port of Tauranga had to get the support of its minority shareholders, including 4.5 per cent shareholder Infratil.

"To do that we have to retain a reasonable amount of liquidity in the stock," he said. "We are up to our armpits sorting out the detail right now."

Cairns denied that the head office would be in Tauranga and said this would be decided by the management and board of the new entity.

In the new company, the two ports would specialise in certain trade in an "economically logical way" and catering to the needs of customers.

The new super-port would be an "excellent blue-chip infrastructure stock" with good certainty of dividends, said Cairns.

The combined entity must have a strong critical mass to compete with Australian ports.

"I think it would put a very strong healthy port with terminals in two cities to compete against the likes of Brisbane or Melbourne."

Major shipping lines had said New Zealand must be careful that it did not end up as a feeder to Australia, he said.

"We have got to really start thinking of an integrated land transport plan with a 30-year time frame."

Cairns has said the new super-port company would remain listed and it would be logical to use the NZX-listed Port of Tauranga as the ownership vehicle.