Shares Remain Well Below Offered Price
Auckland International Airport Ltd. investors didn't react with
much enthusiasm after Dubai Aerospace Enterprise announced its
intentions to purchase between 51 percent and 60 percent of the
airport Monday.
The bid is for up to $3.05 per share in a deal worth an
estimated $4.46 billion, according to the Associated Press.
ASB Securities advisor Stephen Wright said the offer was not as
"straightforward" as it first appeared. He believes there might
have been a more positive reaction from investors had the offer
been a cash-only deal.
"I don't think people will be overwhelmed by it. I think they'll
be underwhelmed," Wright said.
If the proposal is approved by shareholders, AIAL and DAE will
enter into a "cooperation agreement." Under this agreement, DAE
will make a commitment to enhance AIAL's existing business and work
with the airport to pursue new opportunities beyond the existing
airport site, according to AKL.
"We believe DAE will bring additional aviation and tourism
development experience to the New Zealand business. This
partnership should deliver significant benefits to the company and
New Zealand tourism as a whole," said Chairman of the board of
AIAL, John Maasland.
The AP reported overall market reaction to the takeover proposal
as muted, with the current share price well below the DAE
offer.
AKL directors unanimously recommended the deal in the absence of
a better offer. Shareholders will be asked to vote on the proposal
at a meeting in November 2007.
Bob Johnson, DAE's chief executive officer said DAE regarded the
proposed transaction as a "significant development with exciting
potential for both parties."
"Auckland Airport Limited will be a cornerstone investment for
DAE and as such, will receive our considerable support to continue
to successfully develop the business on the global stage," he
said.
Maasland said there had been a significant increase in interest
in AIAL from a wide range of parties including infrastructure and
pension funds in recent months.
"This level of interest is not surprising, given that Auckland
International Airport is the only standalone listed asset of its
kind in Australasia and is widely recognized as a well managed and
highly efficient operation.
The board considered that any proposal needed to not only
achieve a premium for shareholders, but to also introduce an
industry partner who would further enhance our plans for growth and
development."