Shares Remain Well Below Offered Price

Auckland International Airport Ltd. investors didn't react with much enthusiasm after Dubai Aerospace Enterprise announced its intentions to purchase between 51 percent and 60 percent of the airport Monday.

The bid is for up to $3.05 per share in a deal worth an estimated $4.46 billion, according to the Associated Press.

ASB Securities advisor Stephen Wright said the offer was not as "straightforward" as it first appeared. He believes there might have been a more positive reaction from investors had the offer been a cash-only deal.

"I don't think people will be overwhelmed by it. I think they'll be underwhelmed," Wright said.

If the proposal is approved by shareholders, AIAL and DAE will enter into a "cooperation agreement." Under this agreement, DAE will make a commitment to enhance AIAL's existing business and work with the airport to pursue new opportunities beyond the existing airport site, according to AKL.

"We believe DAE will bring additional aviation and tourism development experience to the New Zealand business. This partnership should deliver significant benefits to the company and New Zealand tourism as a whole," said Chairman of the board of AIAL, John Maasland.

The AP reported overall market reaction to the takeover proposal as muted, with the current share price well below the DAE offer.

AKL directors unanimously recommended the deal in the absence of a better offer. Shareholders will be asked to vote on the proposal at a meeting in November 2007. 

Bob Johnson, DAE's chief executive officer said DAE regarded the proposed transaction as a "significant development with exciting potential for both parties."

"Auckland Airport Limited will be a cornerstone investment for DAE and as such, will receive our considerable support to continue to successfully develop the business on the global stage," he said.

Maasland said there had been a significant increase in interest in AIAL from a wide range of parties including infrastructure and pension funds in recent months.

"This level of interest is not surprising, given that Auckland International Airport is the only standalone listed asset of its kind in Australasia and is widely recognized as a well managed and highly efficient operation.

The board considered that any proposal needed to not only achieve a premium for shareholders, but to also introduce an industry partner who would further enhance our plans for growth and development."

FMI: www.dubaiaerospace.com, www.auckland-airport.co.nz