UPDATE 1-Canada fund to amend offer for NZ Auckland Airport

(Adds company comments, background, updates share price)

By Adrian Bathgate

WELLINGTON, March 10 (Reuters) - The Canadian state pension fund bidding for 40 percent of New Zealand's Auckland International Airport Ltd (AIA.NZ: Quote, Profile, Research, Stock Buzz) said on Monday it would restrict its voting rights to meet stricter government regulation, but would likely walk away if its bid fails.

Canada Pension Plan Investment Board (CPPIB) said if its NZ$1.8 billion ($1.4 billion) bid succeeded, it would further restrict its voting rights to 24.9 percent of Auckland Airport shares from its originally planned 30 percent.

It said it was unlikely to launch a fresh bid if shunned by either shareholders or the government.

"We would step away and consider our options, but I'm not confident we would come back with a subsequent offer at this stage," vice-president Graeme Bevans told Reuters.

Last week the New Zealand government tightened rules for approval of stakes of more than 25 percent stake in strategic assets by foreign investors, in a move that analysts said was aimed at stopping the Canadian bid.

The move followed another earlier policy change that reduced tax benefits on part of the CPPIB bid plan.

The bid has met with public as well as political opposition, because of the strategic nature of the airport, which handles 70 percent of New Zealand's international traffic.