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Thu 16 Aug 2007 11:04 AM

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Auckland airport bid receives further blow

Local investors snap up enough shares to block Dubai's move to buy a majority stake in New Zealand airport.

State-owned Dubai Aerospace Enterprise (DAE) received a further blow to its hopes of securing a majority stake in New Zealand's Auckland International Airport on Wednesday after local investors revealed they have bought up enough shares in the airport to block DAE's bid.

State-owned New Superannuation Fund, which specialises in pensions, and Infratil, a utilities investor based in Wellington, said they together now control 6.2% of the company that owns New Zealand's busiest airport, reported Bloomberg.

Combined with the 22.8% stake held by Manaukau and Auckland city councils, from which elected officials have raised concerned over foreign control of the airport, the move would be enough to stop DAE from gaining the 75% shareholder approval needed to okay the deal, if the relavent parties reject the offer when they vote on it in November.

There is “a strong business case'” for New Zealand investments in Auckland airport, said Infratil chief executive Lloyd Morrison.

“We have been talking closely with the councils,” Morrison told Bloomberg. “Their view and their role will be important. We have a lot of common ground with them.

“We expect to be involved in considerably more discussion over what the optimal ownership, control, and capital structure of Auckland Airport should be."

Infratil holds 2.1% of Auckland airport, while New Zealand Superannuation owns a total of 4.1%.

Last month DAE offered to pay up to NZ$2.6 billion ($2.08 billion) for a controlling stake in the airport, which was backed by the airport's board.

Under the offer, which values the whole of Auckland Airport at NZ$5.6 billion ($4.5 billion), a new company will be created, in which DAE will have a stake of 51 to 60%.

The bid has met stiff opposition from New Zealand's government, as well as local residents and businesses.

Trade Minister Phil Goff said earlier this month the government backed opposition to the deal, but has since backtracked, claiming his comments only referring to the 22.8% of the airport owned by local councils.

The deal also still has to be approved by the government under the Overseas Investment Act.

In an attempt to allay growing hostility, DAE has said it plans to retain the airport's listings in both Auckland and Australia if its bid is successful.

The company said its proposals did not require shareholders to sell all their shares.

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