Auckland Airport changes advice on Canadian bid

By Adrian Bathgate

WELLINGTON (Reuters) - New Zealand's Auckland International Airport Ltd (AIA.NZ: Quote, Profile, Research, Stock Buzz) said investors should sell into a NZ$1.4 billion ($1.1 billion) partial takeover offer from a Canadian state fund after a sharp fall in the company's share price.

However, Auckland Airport, the country's main international gateway, said a majority of the board still recommended voting against the Canada Pension Plan Investment Board's NZ$3.6555 per share bid for 40 percent, saying the company is worth more in the long term.

The airport company said it had amended its position on the offer after its share price fell sharply. It still trades about 20 percent below the bid price.

Macquarie Equities investment director Arthur Lim said the airport's decision was sensible. "This is the only offer they've got on the table, and the value gap between the share price and the offer price has opened up very, very significantly."

Lim said the offer now hangs in the balance, with retail shareholders likely to decide the fate of the airport.

About 23 percent is held by two councils, both of which have said they will not sell, with another 30 percent held by institutional investors.

"It's inconceivable that the institutions, who are there to look after investors, will not sell into the offer," Lim said.

Shares in the airport rose as much as 3.6 percent on the announcement and last traded 1.8 percent higher at NZ$2.85. The stock reached NZ$3.27 when the offer was first announced last November, but then fell as low as NZ$2.40 last month as equity markets around the world fell.