KEY POINTS:
The share market tumble has proved bitter-sweet for the Canadian bid for 40 per cent of Auckland International Airport.
The Canada Pension Plan and Investment Board's $3.65 offer is looking sweeter by the day as airport shares continue to trade $1 or more below that, putting added pressure
on the airport board to reconsider its objection to the bid.
CPPIB vice president Graeme Bevans said the offer price finally set last December was what his company had to live with.
"We have an offer in the market - there's nothing we can do about that. The question is would we offer the same price today given market conditions - probably not."
While the listed value of the airport would decline from day one for the CPPIB, it had analysed and priced the airport as a 30-year "hold" asset.
The airport board's chairman Tony Frankham said the directors had always planned to go back to shareholders with a review of the December "don't sell" recommendation by March 6 and the sharemarket fallout from global turmoil had added another dimension to this decision.
"The market has changed significantly since December so we have an obligation to review our recommendation. The board considers that it has a responsibility to whether the reconfirm its recommendation or otherwise."
Institutional shareholders are piling up the pressure on the board to change its stance.
Shareholders are required to make two decisions - whether to sell their shares into the offer, and whether to vote for or against CPPIB becoming a 40 per cent shareholder.
The Canadians need 39.2 per cent of acceptances and a majority vote in order to complete the transaction.
"It's quite clear that the institutions obviously being short term shareholders want to sell into the offer but they need the co-vote for the offer to succeed."
Smaller retail investors and the Auckland and Manukau city councils with their 23 per cent stake were a diverse group to represent.
"It is very very difficult for the directors to make a recommendation that will apply to all shareholders. We've got very distinct shareholder groups with their own investment requirements and parameters," Frankham said.
"We could say we make no recommendation but I don't think that's responsible. We've made a recommendation that was on balance. It was very clearly explained and any other recommendation that we confirm or change will be on balance."
Both councils have stated they will not sell their shares but Auckland remains open to supporting the partial takeover. It will vote at a special council meeting next month, before the March 13 deadline for the offer.
NEXT STEPS
Early March: Auckland City Council votes on its response to CPPIB offer
March 6: Deadline for Auckland airport board to review its objection
March 13: CPPIB offer deadline for shareholders