Manukau City Council has signalled its opposition to the CPPIB partial takeover proposal for Auckland International Airport Limited (AIAL).
Manukau Mayor Len Brown says that whilst council accepts aspects of the takeover offer are attractive and acknowledges that, as a publicly owned super fund, CPPIB has values which are similar to those of the council, as a whole the offer does not stand up when measured against the council’s criteria for its shareholding in Auckland airport.
Mr Brown says the council acknowledges the offer would meet some of its criteria including: the maintenance of its shareholding; continued development of the airport; and retention of listing on the New Zealand Stock Exchange.
“However, this offer will lead to a single foreign shareholder having a controlling interest and therefore the council must reject the offer.”
Manukau City Council and Manukau City Investments Ltd (MCIL), as owners of the council’s shares in AIAL, are united in their view that the takeover offer should not go ahead.
Lomond Seel, Chair of MCIL, says his company is concerned that CPPIB brings little in the way of direct airport experience and would have limited expertise to contribute to Auckland International Airport’s growth strategy.
“The board of AIAL has indicated it does not see that the introduction of CPPIB as a cornerstone shareholder would assist AIAL in any material way. I support the board’s opinion as we also see benefits in establishing a synergistic relationship with a partner which has global connections and associations to bring additional airport expertise or tourism opportunities to the company,” Mr Seel says.
Mr Brown says that earlier this year the council consulted with the Manukau community, and residents sent a strong message that the airport company should remain in New Zealand hands, and that council should retain its shareholding.
“The airport is too important to Manukau, the Auckland region and New Zealand for a single, and foreign, shareholder to have a controlling interest,” says Mr Brown
“This council needs to be confident that any new investor can contribute substantially to the airport’s performance, through new business, technology, people, expertise and capital, as well as through restructuring the company’s finances. It is not certain that CPPIB will be able to bring this to the airport.
“We must not lose sight of the company’s extensive property portfolio, its position as a major employer in the region and that it is a vital transport hub, all within Manukau. These factors make it even more important that AIAL remains a New Zealand controlled company.”
As a long term holder of shares the council is also concerned that if the partial takeover offer succeeds there remains uncertainty as to whether a subsequent yield enhancing restructuring as proposed by CPPIB can actually be implemented.
Mr Brown says that both council and MCIL note that the board of Auckland Airport is optimistic about the value of the airport and the way in which it is positioned to benefit from growth in aviation in this part of the world.
“This supports our position to retain our shares in AIAL so that New Zealand can continue to benefit from growth in the long-term.
“Ultimately, we want the company to be in the best position to take advantage of financial and operational opportunities to maximise value for its shareholders, while respecting the requirement that it remains in majority New Zealand ownership.”
Mr Brown says council, like any responsible shareholder, will continue to consider its position as events unfold.