The Canadian pension plan’s C$1.4 billion ($1.4 billion; €868 million) bid for a 39.2 percent stake in Auckland International Airport will not proceed as CPPIB’s application under the Overseas Investment Act has been rejected by two ministers of the New Zealand government.
This was after advice from the Overseas Investment Office that CPPIB’s proposed investment complied with requirements and was likely to benefit New Zealand.
Associate Finance Minister Clayton Cosgrove and Land Information Minister David Parker declined the application on the grounds that the deal would not be of benefit to New Zealand.
“Under the Overseas Investment Act 2005, Ministers are required to decline consent if they are not satisfied that all of the applicable criteria are met,” the two ministers said in a joint statement. “In this case we are not satisfied that the ‘benefit to New Zealand’ criterion is met.”
They added that even if the investment was beneficial to New Zealand – as concluded by the Overseas Investment Office – “we could not agree that the benefit is substantial and identifiable.”
The deal was set to go ahead last month after CPPIB voluntarily decided to reduce its voting rights to 24.9 percent of all voting shares in response to an amendment in the Overseas Investment Regulations by the New Zealand government that sought to prevent foreign buyers from taking control of local strategic assets.
More than 29,000 of the airport’s shareholders had agreed to the pension plan’s offer of NZ$3.6 ($2.8; €1.8) per share, and of the 80 percent of shareholders by value who voted on the deal, almost 58 percent were in favour of it.
The pension plan said in a statement it was disappointed with the rejection of its Overseas Investment application. “We are naturally very disappointed in the outcome,” CPPIB vice president and head of infrastructure Graeme Bevans said.
Chairman of Auckland Airport, Tony Frankham, said in a release that though the outcome is not in keeping with the wishes of the majority of the shareholders who had voted to approve the deal, the board needed to focus on moving the business forward.