Dubai Aerospace takeover of Auckland Airport grounded

Auckland International Airport and Dubai Aerospace Enterprise have mutually terminated talks over a potential US$1.82 billion offer for a majority stake in the airport operator.

The news puts Canada Pension Plan Investment Board in the box seat to acquire a sizable stake in the airport, which controls 75 percent of New Zealand's international passenger traffic.

Auckland Airport and Dubai Aerospace said they have agreed that "in light of the circumstances", they have no alternative but to terminate the Merger Implementation Agreement on a "mutually acceptable basis". Each party will bear its own costs.

Dubai Aerospace on Friday accused Auckland Airport of breaching merger obligations by failing to ensure a successful outcome to the deal. It also said legal action by Air New Zealand over airport landing fees constituted a "prescribed occurrence" under the agreement. Auckland Airport disputed the claims.

The Dubai company's offer for between 51 and 60 percent of Auckland Airport, appeared doomed well before Friday's claims.

It faced stiff opposition from central and local government authorities - which own a combined 23 percent stake in Auckland Airport - due to concerns about such a significant national infrastructure asset falling into foreign hands.

Infrastructure investor Infratil Ltd and the government-backed New Zealand Superannuation Fund introduced another obstacle when they acquired a joint 6.2 percent stake in the airport last month and said they planned to remain long-term shareholders.

The move won't come as a surprise to the market. Many commentators believed Dubai Aerospace was looking for a quick way out of the deal, which needed 75 percent shareholder support and appeared unlikely to succeed.