Friday, February 6, 2009

Is another Auckland Airport bid likely under a business friendly Government?

Update: Read January 2012 rumour about Airport takeover 

Is Auckland International Airport set for M & A activity?

Its time for some not so idle speculation.

With the new National Government in place and the current relaxing of the rules around the RMA, the major planning law that has stopped economic development of New Zealand, we could expect to see developments in other areas of business in regards to relaxing laws and legislation to allow business to flow quicker and therefore more efficiently and more profitably.

A case in point that I would like to regurgitate is the fiasco that ended last year when it was vetoed by the then Labour administration, after over a year of political wrangling, the Auckland International Airport [AIA.NZ] sale saga.

Two suitors were vying for a slice of New Zealand's largest airport, first Dubai Aerospace Enterprise (DAE), then the Canadian Pension Plan Investment Board (CPPIB).

Both these bids eventually failed.

Both DAE and CPPIB were knocked back for no other than petty political reasons.

After these two bids failed Lloyd Morrison, through his company Infratil [IFT.NZ] and a partnership with the NZ Super Fund, accumulated around 9% of AIA.

Morrison also owns a majority stake in Wellington Airport and was behind a failed proposal to build a second airport in Auckland.

The thing is, since the relaxing of relevant business legislation one might expect the National Government's attitude to allowing private enterprise to do business freely, therefore opening up the possibility of another bid for the Airport-either by one or both of the spurned suitors or from Infratil.

The only impediment is the obvious funding problems now that credit is difficult to obtain.

However, The one most likely to bid would be DAE, because it is backed by massive oil derived financial backing and because Auckland Airport would be strategic to its global plans to expand its infrastructure.

It is interesting to speculate and this scenario isn't that far fetched.

AIA shares have added around 10% over the last few weeks.

Disclosure: I own AIA shares

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