Wellington (Thomson Financial) - The New Zealand government on Friday rejected a bid by the Canada Pension Plan Investment Board to take a 40 percent stake in the country's aviation hub, Auckland International Airport.
Land Information Minister David Parker and Associate Finance Minister Clayton Cosgrove said they were not satisfied the investment would have benefited New Zealand. They rejected advice from the government's Overseas Investment Office (OIO) that the controversial deal should be approved because it would have substantial benefits for New Zealand.
Auckland International Airport shareholders also earlier gave the thumbs-up to the deal.
CPPIB planned to invest nearly NZ$1.8 billion ($1.44 billion) for its stake in the airport, which handles around 70 percent of New Zealand's international air traffic.
The decision was not a surprise in light of the government's decision last month to tighten foreign investment rules in response to the bid. CPPIB responded to that move by saying it would restrict its voting rights in the airport to 24.9 percent to ensure control remained in New Zealand hands if its bid was successful.
CPPIB's head of infrastructure, Graeme Bevans, said Friday the ministers' decision was disappointing, coming after the OIO had recommended the investment be approved. "The ministers chose to decline it, so clearly we are very disappointed with that outcome," he told Radio New Zealand.
Bevans said CPPIB has no plans to appeal the decision in the courts or to continue with attempts to invest in the airport.
Shareholders had been offered NZ$3.598 a share by CPPIB, well above the trading price on the New Zealand Stock Exchange. AIA shares were 20 cents lower at NZ$2.15 in late morning trade Friday, after reaching a low of NZ$2.08 following the announcement of the decision.
Auckland Airport Chairman Tony Frankham said the board would continue to look at finding a cornerstone investor. Oliver Saint of the New Zealand Shareholders' Association said the decision to reject the Canadian bid was ideologically driven. "They're making rules up as they go along," he said of the government.
New Zealand has liberal rules covering foreign investment but there was widespread public opposition to the airport falling under foreign control.
The United Arab Emirates-based Dubai Aerospace Enterprise abandoned an attempt to take a majority stake in the airport in September due to opposition from key local government shareholders, who had combined stakes of about 23 percent.