Auckland Airport says Dubai bid in doubt
Wellington, August 31, 2007
New Zealand's Auckland International Airport said it had been informed by Dubai Aerospace Enterprise that a legal challenge against the company was in breach of the terms of Dubai's $1.8 billion takeover bid, sending its shares falling.
Dubai Aerospace said the airport had not done enough to ensure the bid, which has board backing, succeeds, Auckland Airport said in a statement.
The two parties would now enter talks, but if no agreement was reached after five business days then the bid could be terminated by either party.
An analyst said widespread public and political opposition to the deal may be causing Dubai Aerospace to have second thoughts about the bid.
'You get the feeling they've decided to move on to other endeavours, this one might be getting a bit hard for them,' said Craig Brown, principal at Walker Capital Management, who hold shares in Auckland Airport.
Shares in Auckland Airport fell 5.25 per cent when the market opened, but later recovered to last trade down 3.6 per cent at NZ$2.94.
Dubai Aerospace said the legal challenge by the national carrier, Air New Zealand, was a variation to the terms of its offer, a charge Auckland Airport denies.
On July 2, the airport said it would raise the landing charges it levies on airlines by 2.5 per cent a year for the next five years. Air New Zealand said it would appeal the increase through the courts.
The airport denied that it was 'not using its best endeavours to ensure a successful outcome to the proposal'.
Both parties declined to comment further.
The Dubai Aerospace offer is for between 51 per cent and 60 per cent of the company, and is equivalent to NZ$3.80 a share. The deal is due to be voted on in November, and requires 75 per cent shareholder approval.
Auckland Airport, a top 10-company and New Zealand's main international gateway, is about 23 per cent owned by two Auckland local councils, who have yet to declare whether they will back the deal. Reuters