The Port of Tauranga has withdrawn from formal merger talks with Ports of Auckland.
The decision to call off talks was announced today by Port of Tauranga chairman John Parker.
A merger of the ports was proposed by Ports of Auckland more than a year ago and both ports had invested a significant amount of time and money considering the merits of the merger.
Auckland Regional Holdings, the owners of Ports of Auckland had been unable to decide whether the merger was worth undertaking, or the terms on which they would be prepared to pursue a merger, Mr Parker said.
So reluctantly, the Port of Tauranga has withdrawn from the discussions.
With a sound business case for the merger and New Zealand needing to solve its infrastructure deficit, Port of Tauranga was ready and able to take part when an opportunity to merge arose in the future, he said.
Port of Tauranga chief executive Mark Cairns said economic and financial modelling demonstrated a merger would generate significant financial benefits to be shared with customers and shareholders.
A merger would also generate substantial public benefits; reducing carbon dioxide emissions, facilitating better opportunities for coastal shipping, and making a start on the inevitable port rationalisation needed in this country in the future with the advent of larger, faster container ships.
In a country with a population of about four million people -- similar to that of Sydney -- New Zealand's tax base simply could not sustain the funding of high quality road and rail infrastructure connections to all the country's 13 ports, Mr Cairns said.
The two port companies announced they were investigating the possibility of a merger in October.
The next month shipping giant Maersk Line, which handles 40 percent of New Zealand's sea freight, said it preferred Auckland over Tauranga to handle most of its North Island services.
Then just this week German shipping giant Hamburg Sud announced it was moving its North Island call to Tauranga from Auckland.
Indications of some of the difficulties involved in hammering out a merger agreement appeared in November, when Auckland Regional Council chairman Mike Lee said the Maersk announcement meant the Auckland company should have a majority stake in any merger.
At the time Mr Cairns said Mr Lee's comments were ``unfortunate''.
The council decides how funds earned by Ports of Auckland are distributed to regional transport and stormwater programmes.
A merger was also expected to rise regulatory issues.
Port of Tauranga shares were down 20c to $6.10 in mid-afternoon trading.