Wednesday, October 31, 2007

Auckland Airport Merger deal nosedives

News today that a bid by the Canada Pension Plan Investment Board for a sizable stake in Auckland International Airports [AIA.NZ] has been rejected by the Airport board is no surprise considering what was on offer.

Chairman of the Board of Auckland Airport, John Maasland, said the proposal would have involved an amalgamation and the creation of a newly listed airport company. Under the deal Canada Pension would have owned between 39% and 49% of the new company.

"If the amalgamation proposal went ahead existing Auckland Airport shareholders would have retained between 51% and 61% of the new company and maintained an investment in the restructured company."

It is understood that there were offers of various structures giving value to shareholders of up to $3.90 per share.

The company would also have been loaded up with considerably more debt.

I didn't think this or any other deal would go through and I said so months ago but the reason for the deal falling through, while clear, I never considered.

While I am extremely pleased that the deal fell over, I think at least shareholders could have been asked for their input on the proposal.

The company has excellent long term prospects and shareholders who didn't bail out today will reap the long term rewards.

AIA shares were down NZ .21c today to $2.87 on heavy volume.


Disc I own AIA shares in the Share Investor Portfolio


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