Dubai Aerospace bids for Auckland Airport

WELLINGTON - The board of Auckland International Airport said Monday it was recommending a bid by Dubai Aerospace Enterprise to take control of the company that runs New Zealand's largest air hub.

Dubai Aerospace Enterprise (DAE) is proposing to buy between 51 percent and 60 percent of the New Zealand firm under the deal, which values the business at 5.6 billion dollars (4.4 billion US).

The deal is controversial, with some political parties and Auckland local governments opposed to seeing overseas control of the airport.

Shareholders would receive up to 3.80 dollars a share, a premium of 55.9 percent to the average trading price over the month to May 5, when takeover speculation began.

Auckland International Airport (AIA) shares closed up 10 cents at 3.41 dollars on the New Zealand stock exchange, after reaching a high of 3.50.

DAE says on its website that it is building a global aerospace corporation that includes manufacturing, services, airports and education, looking to international partnerships to grow in emerging markets.

Among DAE's major projects is an aerospace complex based at Dubai World Central, the massive new airport and logistics city being built in Jebel Ali, Dubai.

AIA directors said the decision to approve the bid by the aviation and aerospace company owned by the Gulf sheikdom was reached unanimously in the absence of a superior offer.

"We believe DAE will bring additional aviation and tourism development experience to the New Zealand business," said AIA chairman John Maasland.

"The partnership should deliver significant benefits to the company and New Zealand tourism as a whole."

Shareholders will vote on the proposal at a meeting in November.

The proposal involves the establishment of a new company, Auckland Airport Ltd, in which Dubai Aerospace would invest up to 2.6 billion dollars.

Shareholders would receive 2.34 dollars cash per share, a stapled security of a share plus convertible loan note in the new company, and a dividend from the present airport company of seven cents a share.

Shareholders could choose to vary the amount of cash or stapled securities under the deal, AIA said.

DAE chief executive Bob Johnson said the airport would be a cornerstone investment for his company, which intended to continue developing the business.

Auckland Airport, which handles 11 million passengers a year and 70 percent of international arrivals into New Zealand, has been under scrutiny by a number of potential bidders recently and AIA said it was still open to alternative offers.

"This is a wait and see for shareholders. There has been speculation other parties are interested and shareholders would rather have just cash," said Grant Williamson, partner at brokerage Hamilton Hindin Greene.

Last month, AIA said the Canada Pension Plan Investment Board approached some shareholders with an offer of 3.10 dollars a share ahead of a possible bid. The airport said it had also been in discussions with other parties.

The mayor of nearby Manukau city Sir Barry Curtis said he was opposed to the bid and he said it could be defeated if Manukau and Auckland city councils worked together.

Manukau City Council owns 10.05 percent of AIA and Auckland City Council 12.75 percent, giving them 22.8 percent in total.

The deal is subject to agreement by 75 percent of airport shareholders and also needs regulatory approval.

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