The board of New Zealand's Auckland International Airport said shareholders should reject a NZ$1.8 billion (US$1.4 billion) partial takeover offer from the Canada Pension Plan Investment Board (CPPIB), because it undervalued the company.
The board of the airport company said on Monday the CPPIB was not offering enough money, had no expertise in running airports and would hike the company's debt levels.
"We do not believe the offer fully reflects the value of Auckland Airport," Chairman Tony Frankham said.
The CPPIB formally opened its bid for up to 40 percent of Auckland Airport on Friday saying its offer of NZ$3.6555 a share, was at the "very high end of comparable international airport valuations" and at a hefty premium to the airport company's recent trading.
The Canadians have proposed a capital restructuring plan if their bid succeeds, which would see shareholders given a mix of shares and convertible notes in a new company.
"The board has serious doubts about whether the amalgamation proposal outlined by the Canadians can succeed, and was previously concerned by the high levels of debt of that proposal," Frankham said.
Analysts have widely tipped the CPPIB bid to fail, saying its plan poses a big risk for the company because of the significant rise in its debt levels.
Shares in Auckland Airport, a top-10 company, closed last week at NZ$2.80.
Auckland Airport handles more than 70 percent of New Zealand's international traffic. Shareholder discontent at the way the company has handled prospective takeovers led to the resignation of the chairman and three new board members appointed at last month's annual meeting.
The airport company said it still favored finding a strategic partner with airport experience. "By accepting this partial offer shareholders will have lost any future opportunity to benefit from the introduction of an industry partner."
Frankham said if the Canadian offer failed the airport company would start looking for a cornerstone shareholder with industry experience to deliver future value.
In September, state-backed Dubai Aerospace Enterprise withdrew a bid for a stake of up to 60 percent at the equivalent of NZ$3.80 a share, saying the board had not done enough to promote the deal.
The airport's sale is politically sensitive, with opponents arguing it would lead to foreign control of a strategic asset.
About 23 percent of Auckland Airport's shares are owned by two local city councils. The two, along with other key shareholders New Zealand's state pension fund and utilities investor Infratil, have indicated they are not keen to sell.