KEY POINTS:
Auckland International Airport shares staged a minor rally yesterday before closing up just a cent after this week's wipe-out.
The shares finished at $2.25 after being up 10c at one stage on Tuesday's close when more than $300 million was wiped off the stock in the wake of the Government's move to put up barriers for foreign investment in strategic assets.
The Canada Pension Plan Investment Board's partial takeover bid for the company expires next Thursday.
One analyst said he was puzzled at why anyone would be showing confidence in the bid, given the Government's clear signal on the deal.
Shareholders are required to decide whether to sell their shares and whether to vote for or against CPPIB upping its stake to 40 per cent.
Shareholders Association chairman Bruce Sheppard said feedback from small shareholders since Finance Minister Michael Cullen's move suggested they would change their votes to back the Canadian bid because they were angry.
Small shareholders had about 30 per cent of the company and although naturally inclined to vote against assets being sold to foreign stakeholders, they would now switch.
He expects a narrow majority in favour for the Canadians, but believes the bid will be knocked back at the approval stage by the Government.
"If Cullen had left well alone other than kiboshing the tax deal, the likely outcome is that he wouldn't have had to confront the issue because 60 per cent of the small shareholders would have voted no.
"By interfering, he's guaranteed that mas and pops will vote 70 yes - it will be a done deal."
The Government would then have to find a way of the airport meeting the strategic asset criteria, Sheppard said.
Auckland Airport board chairman Tony Frankham said it would not be pushing its stance - the belief CPPIB brings nothing except cash.
"Given the Government has expressed its views and is most unlikely to give consent we would be most unwise to spend shareholders' money on advertising and marketing to explain how to do things."
The CPPIB lodged an application with the Overseas Investment Office on November 16. Cabinet ministers Clayton Cosgrove and David Parker will make the final decision.
A spokeswoman for the office said decisions typically took three months but complex cases could take longer.
FOREIGN OWNERSHIP ISSUE ALSO BEING DEBATED IN JAPAN
New Zealand is not the only country debating about whether to allow foreign ownership of airports.
In Japan, the Government pointed to "security concerns" when it prepared a bill which included limiting foreign ownership of airport operators to less than a third of voting shares.
The proposal came after a group led by Australia's Macquarie Airports last year bought 20 per cent of Japan Airport Terminal Co, which runs the terminal buildings at Haneda airport in Tokyo.
The Japanese government was also looking at listing Airport Corp - operator of Narita airport in Tokyo - potentially in the financial year starting April, 2009.
The New Zealand Government this week altered rules so ministers will have to consider whether an overseas investment will affect New Zealand's control of strategic assets.
However, the plan to restrict foreign investment put forward by Japan's Liberal Democratic Party has been placed on hold following Cabinet disagreement, with criticism voiced by both Economics Minister Hiroko Ota and Financial Services Minister Yoshimi Watanabe.
Watanabe has said it was wrong to take exclusive and isolationist measures when other means were available.
Japan's Transport Ministry last week said the bill would not be considered during this session of Parliament, slated to end on June 15.
An official from the ministry's civil aviation bureau said restrictions were preferable.
A deadline of the end of the year has been set to reconsider the plans to limit foreign ownership.
Ota, supporting the decision to allow more time to review the issue, said: "This is a very important issue because it is a touchstone on how to meet two goals, which is to open up the country while ensuring national security.
- Owen Hembry
