KEY POINTS:
Auckland International Airport's board is not holding its breath for anyone else wanting a major chunk of the company.
Eighteen months after potential bidders first touched down, ownership of the company is back to where it started, and it is $15 million poorer for dealing with ownership issues.
Business and shareholder groups yesterday were angry at the way in which the Canada Pension Plan Investment Board was sent packing.
The CPP's bid for 40 per cent of the airport was rejected by Land Information Minister David Parker and Associate Finance Minister Clayton Cosgrove, who used their power under the Overseas Investment Act to veto the sale.
They cited a lack of benefit to New Zealand as the key reason for declining the bid. That was despite the Overseas Investment Office recommending Government ministers allow the bid.
It was unknown whether the deal would create jobs, increase export income, competition or investment, or support New Zealand's international reputation, the ministers' ruling said.
"We are not satisfied that the benefit to New Zealand criterion is met," the ministers said. "Even if we were to agree with the OIO's conclusion that that criterion is met, we could not agree that the benefit is substantial and identifiable."
Shares in the company tumbled as hedge funds bailed out, which saw the stock fall at one point as much as 27c before closing at $2.13.
The $1.8 billion CPP offer was for $3.65 a share.
The airport board's chairman, Tony Frankham, said he was not surprised the ministers rejected the bid.
The company's six directors would now knuckle down without the distraction of ownership issues hovering over it.
While directors would consider prospects for introducing a new cornerstone shareholder that could add strategic value, he said such a group would be hard to find given the Government's clear stance on ownership above 25 per cent and fallout from the credit crunch. A crackdown on schemes to minimise tax also acted as a deterrent.
"It's questionable whether we need another cornerstone shareholder."
Options for the airport include joint ventures and further expansion.
"These issues have not been addressed - we've been waiting to see whether the Canadians were coming on board."
The CPP's infrastructure head, Graeme Bevans, said he saw no value in seeking a judicial review and currently had no plans to bid for the airport or other New Zealand assets, even if there was a change in government.
"One always feels flat when you lose a transaction like this. We were very pleased with the support we got from shareholders - 29,000 people voted in favour of it and accepted into the offer. It's had very strong support."
Bevans said he had no comment on whether the Government's stance would deter other foreign investors.
"I think that's for each investor to call their own judgment on."
Paul Glass of Brook Assett Management, which holds airport shares, said any foreign investor eyeing infrastructure would "need their head read".
"It's a pretty disgraceful decision, really. It just goes to show it is election year and they thought the wind was blowing in one direction."
He said the Government now needed to draw up a list of strategic assets.
Brook's calculations showed the share price would not reach the Canadians' offer price until 2016 on current projections.
Infratil, which backed the deal after initial opposition, holds a 3.3 per cent stake which it says it has no plans to increase.
Spokesman Paul Ridley-Smith said the decision sent out the message that passive investing was no longer good enough.
"If someone was going to come and invest in any infrastructure asset and say they want to run it as is, then the implication is that it's not good enough.
"All they should have to say is that they will run it in a socially responsible manner."
The decision gave no weight to the fact the Canadians were paying a very good price.
"Of course it's relevant - we deprive ourselves of foreign exchange when we've got a huge current account deficit."
Shareholders Association chairman Bruce Sheppard said the Government's decision was entirely predictable.
"They loaded the gun with some legislation, and you don't load a gun unless you intend to shoot it."
