The New Zealand Government has tightened the country’s foreign investment rules in response to a partial takeover offer from a Canadian pension fund manager, for 40% of Auckland International Airport.
As the offer from Canadian Pension Plan Investment Board (CPPIB) nears the 13 March deadline, Finance Minister Michael Cullen introduced a new regulation under the Overseas Investment Act 2005 to provide “greater protection for New Zealand’s major strategic assets.”
The company, which is listed on the both the Australian Securities Exchange (ASX: AIA) and New Zealand Exchange (NZX: AIA) slumped in trading on both the exchanges today in response to the announcement.
In Wellington, the airport’s shares plunged 30 cents or 12% to NZ$2.18 at 12.57PM.
However, CPPIB responded by confirming it is continuing with the partial takeover offer for shares in Auckland International Airport.
“We have always been clear that our desire is to hold a minority stake in the airport, not a controlling one," CPPIB said in a statement.
Mr Cullen said in a statement that the changes have been made in response to the uncertainty and debate that have emerged surrounding the Canadian Pension Plan Investment Board’s offer to shareholders in Auckland International Airport.
“There has been a high degree of public debate about the merits of handing over control of New Zealand’s main gateway to the world to foreign interests,” Cullen said.
“The Canadian Pension Plan bid was always going to require consideration under the Overseas Investment Act and there has been speculation that Ministers would use existing conditions under the Act to reject the offer,” Minister of Finance Michael Cullen said.
“We also wanted to be clear that the very narrow range of assets considered to be strategically important infrastructure on sensitive land will be protected by these provisions in the future. It is important, to state, however, that nothing in today’s announcement rules out an acceptance of any Overseas Investment application. In the case of Auckland Airport, decisions would be made by Land Information Minister.
The minister said the new regulation is in line with a number of other countries, including Australia which already restricts foreign ownership of airports.
“New Zealand already has foreign ownership restrictions on Telecom and Air New Zealand in addition to our generic Overseas Investment regime”, he said.
“This process has moved quickly to provide maximum certainty to markets regarding the government’s intentions.”
Shares at the Australian-listed Auckland International also fell, closing 26.5 cents or12.6% down at $1.835.
