On Feb. 26, shares in New Zealand's Auckland International Airport Ltd plunged 14 percent on concerns a NZ$1.4 billion (US$1.1 billion) partial takeover bid by a Canadian state pension fund might be scrapped.

The New Zealand government has moved to close a loophole that would have given tax benefits to part of the Canada Pension Plan Investment Board's proposal to take 40 percent of Auckland Airport at NZ$3.6555 per share.

The view was that the government had moved to curtail the Canadian bid, said Bryon Burke, an equities dealer at ABN AMRO Craigs. "The market price is sending a strong signal that investors think it's pretty much over for the bid," Burke said.

Shares in Auckland Airport, a top 10 company, last traded 14.1 percent, or 40 cents, lower at a one-month low of NZ$2.46. The stock has fallen 14.8 percent since the start of the year, compared with a 12.3 percent drop for the benchmark top 50 index.

Finance Minister Michael Cullen said the government would give stapled securities, shares which include debt, the same tax treatment as ordinary shares, effective immediately.

"If those instruments were to become common in New Zealand the amount of debt deductions against our tax base could increase significantly," Cullen said in a statement.

If its partial takeover bid is successful, CPPIB plans to put forward a restructuring proposal involving the issue of stapled securities.

CPPIB said it would proceed with its takeover offer as planned, adding that it was always its intention to gain approval from tax authorities for the restructure.

A spokesman for Cullen said the measure had been planned for some time and was not directed at the CPPIB bid.

The bid had got a boost on Feb. 25 after Auckland Airport's board recommended shareholders accept the offer because of a fall in the company's share price.

CPPIB's offer values Auckland Airport at 22 times 2007 earnings before interest, tax, depreciation and amortization (EBITDA), compared with a global average compiled by CPPIB for listed airports of 12.4 times.

The airport handles almost 70 percent of New Zealand's international traffic and is 23 percent owned by two local councils.