NEW ZEALAND. Auckland International Airport Limited (AIAL) today updated the market on the proposed minority (40%) takeover by the Canada Pension Plan Investment Board (CPPIB). But the offer was subsequently shrouded in political controversy after the government announced plans to impose a foreign ownership control test on the country’s “major strategic assets”.
The government said it is making the move in response to speculation surrounding the CPPIB bid. In a statement, Finance Minister Michael Cullen said the government has introduced a new regulation aimed at protecting a “very narrow range of assets”. The new rule will “bolster” the factors government Ministers may take into account regarding overseas investment applications, Cullen said.
“The government’s move today is to be clear about the fact that New Zealand control factors will be taken into account as part of the national interest tests to be applied under the Act,” he said. He added: “New Zealand already has foreign ownership restrictions on Telecom and Air New Zealand. This process has moved quickly to provide maximum certainty to markets regarding the Government’s intentions.”
Political machinations aside, for the transaction to proceed, the Takeovers Code requires a majority of shareholders who vote to approve CPPIB acquiring the stake. If this approval is not gained, the bid cannot proceed, regardless of the number of shares offered for sale.
As of 29 February 2008, the CPPIB advised that acceptances have been lodged for 141,494,218 shares, representing 11.58% of the total shares in the company. Of those acceptances, 114,485,463 shares have been lodged in the CPPIB acceptance facility. These shares can be withdrawn by shareholders prior to the close of the offer.
175,306,129 shareholder votes, representing 14.34% of the total shares in the company, have also been received. Of the votes received to date, 34.84% are against CPPIB acquiring a 40 per cent stake and 65.16% are in favour of the offer.
Auckland Airport shareholders are required to make two decisions – whether to sell their shares into the offer, and whether to vote for or against CPPIB becoming a 40% shareholder. CPPIB needs 39.2% acceptances and a majority vote in order to complete the transaction.
The offer closes on 13 March 2008.
Late last month the AIAL directors unanimously recommended that shareholders should sell their shares into the takeover offer for NZ$3.6555 per share (less the 5.75 cents per share interim dividend to be paid this month). Their revised position followed the fall in global and national share prices which made the CPPIB offer more attractive.
However they were divided as to whether shareholders should vote in favour of CPPIB acquiring up to 40% of the company.
COMMERCE DECISION ON DFS TAKEOVER OF REGENCY IMMINENT
Meanwhile a Commerce Commission decision on DFS Group Limited’s (DFS) application to acquire 100% of the shares in rival The Nuance Group (Nuance) New Zealand is imminent. A decision was expected last Friday.
The application followed Nuance-owned Regency Duty Free Stores missing out in a two-horse race with DFS for Auckland Airport’s single expanded duty free contract last July. The new licence, which will run for seven years from April 2008, embraces a doubling of the Arrivals offer to 1,600sq m.
The agreement between the two companies, if approved, will ensure that the original duplication of the offer throughout the remainder of Nuance’s contract (till August 2009) will not happen.
In considering the application, the Commission said its role is to determine whether the acquisition would have the effect or likely effect of substantially lessening competition in a market.
Whatever the Commission’s decision, it will not affect AIAL’s decision to move to a single duty free retailer when the Regency contract expires, The Moodie Report understands reliably.
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