Reports had emerged in the Sydney Morning Herald Saturday stating that the New Zealand national carrier’s move is in line with its strategy of strengthening its partnership with Virgin Blue. This comes after the two aviation industry players reported in May that they were keen on a merger and were seeking regulatory approvals to form an alliance on transtasman operations.

At that time, the two airlines had argued that their proposed alliance was targeted at enabling them work together on future route and product planning, code sharing and frequent flyer program gains. According to analysts, an equity aspect to the two airlines proposed alliance was not mandatory, adding that the two had already gotten the transtasman alliance which would allow them form the alliance without an equity stake.

Analysts argued that the gains of buying necessary stake are only mandatory if in a move to block another party from doing the same and subsequently strengthening the union between the two airline companies. In that regard, analysts are watching to see what happens as the two have not denied their potential alliance and as such, it would be too early to rule out such a move even though in the meantime it appears it will not happen.

The pundits have it that the regulatory approval for the alliance had already been finely balanced. On Saturday, Air New Zealand reiterated its awareness of an equity aspect in airline alliances most of the time but said the speculated deal between it and Virgin Blue did not have it. According to Air New Zealand, the mandatory regulatory approvals for the transtasman alliance are yet to be concluded and it is subsequently yet to receive any signals of the regulator’s decision. Regulators have until the end of 2010 to deliver their final decision over the transtasman alliance.

However, Air Zealand did not rule out the likelihood of buying a stake in Virgin Blue but reiterated that if it takes such a move, it would advise the market accordingly with regard to disclosure obligations.

According to Axa Asia Pacific, the already revealed agreements between the three companies will take precedence and are still in use, said a statement from the company. NAB and Axa SA had struck a deal in which NAB was to takeover Axa Asia Pacific’s Australia and New Zealand based businesses and Axa SA was to takeover its Asia business.

The proposal would see NAB get 100% of Axa Asia Pacific Holdings and would subsequently merge its Australian and New Zealand operations into its makeup and then divest NAB’s business in Asia to Axa SA. However, the acquisition was turned down by the ACCC in April, saying that the merger between the Australian bank and Axa Asia Pacific would have created a lessened competition environment in the market for retail investments platforms for investors with complex investment requirements.

Even with the ACCC disapproving of the investment, the deal still faces other conditions inclusive of an assortment of regulatory affirmations, an independent expert’s review and shareholder approval. As the deal stands currently, NAB’s takeover bid is pegged at US$5.7 cash apiece Axa Asia Pacific share and A$1.59 cash per Axa Asia Pacific share. NAB’s bid had successfully outdone a bid proposed by AMP Ltd.

NAB is expected to buy Axa SA’s shares in Axa Asia Pacific at A$7.2 billion to be paid in cash. Axa SA, Axa Asia Pacific’s French parent company has a 54% controlling stake in the company. The deal would now see the French company purchase its subsidiary’s Asian business for an estimated A$9.4 billion in cash from National Australian Bank, Axa SA said in a statement.

However, according to NAB, it expects to pay A$4.6 billion for Axa Asia Pacific’s Australian and New Zealand businesses. Even so, NAB will acquire the two businesses minus the A$700 million debt owed by Axa Asia Pacific to Axa SA, that the company revealed was reflected in the price Axa SA will remit for the Asian assets.

The OIO’s report was released during the reporting on its latest decisions on investments in the country. Deutsche bank had in March sought approvals from the office for the purchase of a 49.9% stake in Craigs’ that was previously called ABN Amro when it the Royal Bank of Scotland partly co-owned it before selling off its stake. According to the OIO, the decision to permit Deutsche bank’s investment in Craigs was allowed as the office deemed it beneficial to both companies in the deal.

The deal now allows the Germany bank unlimited access to Craigs’ New Zealand distribution network that is involved in investment banking, asset management and private client advisory services. In other similar big foreign investment takeovers approved by the OIO, the National Australian Bank successfully took over AXA Asia Pacific Holdings’ assets for an investment deal pegged at $412 million.

Axa Asia Pacific Holdings is 100% Australian owned company, by AXA SA. Additionally, there was a major American investment as well into the country with about $130.8 million spent by Contract Aviation Group NZ, the American owned company, for the purchase of New Zealand Airworks Holdings’ assets. NZ Airworks Holdings comprises a number of companies that form the bigger Alliance Airlines Group. Should this investment be approved as well, it would result in a bigger, more robust and proficient group of aviation operators in the country.

However, the OIO would not disclose details of another application by Contract Aviation Group NZ and NZ Airworks. More foreign investments however followed, with AMP Investments NZ Property Fund getting approval for the purchase of the 60.8ha on State Highway One in Waikanae and an additional 9.5ha at Warkworth from APERERR II, controlled by Australians.

Prudential Group made an investment of $119.1 million in an investment that involved the company and American owned American International Group via AIA Aurora, which was part of a merger of Asian operations. Other major foreign investment inflows into the country came from Japan’s Wither Hills Vineyards in a $1.3 million investment purchase of 8ha Blenheim land, RHL NZ; US owned got approval for the purchase of 303ha of Nelson land for $550,000.

Pundits had expected News Corp to launch a similar bid for the New Zealand business. Before the announcement of the New Zealand acquisition, Sky TV’s share price had maintained trading at $4.55 but went up abruptly after the details of the bid surfaced, trading at $5. However, it has since declined again. Pundits further reiterated that News Corp’s investment bid in the UK presents a serious move that New Zealand investors need to consider, as similar moves might be in the offing in the country, regardless of the fact that, at this point, it is just speculation.

Sky TV performed impressively during the global economic meltdown. The company has had major investments recently, with the development of MySky and hi-definition and the additional $145 spending minus considerably increasing its debt levels. Currently, News Corp owns 43% of Sky TV, subsequently, full control might enable it undertake content buying deals, for which New Zealand might be a potential market. SkyTV shares were up 9c at $4.73 after the announcement.

Simon Moutter, Auckland Airport’s CEO, said the move was in line with the company’s plans that sought to impel its earnings at a faster pace than its current organic growth rate through the sell of certain resources into ventures that facilitate such growth. Moutter added that the company could as well increase its international passenger numbers through entering tangible partnerships with companies that share a similar outlook to growth and development, with regard to the airline and travel markets.

Goldman Sachs JBWere’s head of research, Marcus Curley, reiterated that there exists considerable gains Queenstown Airport stands to get from the investment, but stating that the deal’s benefits for Auckland Airport are very limited, more so with regard to its small shareholding and the untested nature of cross selling manifold destinations. According to Curley, Auckland Airport will have to showcase evidence of the gains from the investment before the cynical market is pacified.

Curley questioned Auckland Airport’s insistence on the deal, reiterating the fact that it was undertaken under the hope of flow-on benefits, but because such has never been done before in New Zealand, Auckland Airport faces the task of demonstrating the deal’s benefits in order to build market confidence on their investment strategy. As at the close of trading Thursday, Auckland Airport’s shares were trading at a steady $1.93.

Queenstown Airport is currently experiencing a fast growth rate and if the Queenstown Lakes District Council, its owner, approves the sale, Auckland Airport may be able to up its stake in the company up to about 30% to 35% shareholding. Currently, pundits have pegged Auckland Airport’s market value at about $2.5 billion, terming the acquisition as minor when compared to Auckland Airport’s asset base, thus it may have made sense to undertake it. Back in January, Auckland Airport had invested about $166 million for a 24.5% stake in Cairns and Mackay airports.

In the merger deal, all staff and management will be retained at both institutions and a guarantee was agreed upon for continued, increased community distributions via sponsorships and an initial interest-rate premium for term depositors. That will subsequently see HBS members join SBS Bank with additional representation on the SBS Bank’s board.

Ross Smith, SBS Bank Chief Executive said nothing is expected to change with regard to the daily operations for the current SBS Bank members, except that they won’t be able to undertake their banking services at more North Island Branches around New Zealand. Even so, Smith noted that the merger would help the bank further foment its move towards full national, mutually owned “community” bank status.

Frank Spencer, HBS chairman, said the financial sector was currently experiencing tough times and increasing regulation impediments in a competitive environment are more real for a small bank such as HBS. SBS Bank has assets worth $2.63 billion, whereas HBS’ assets are pegged at $185 million. SBS Bank currently has 15 branches, including four in Christchurch and two in the North Island. HBS has two branches, one in Hastings and one in Napier. SBS has all along harbored ambitions of becoming a national player in the country, reporting an operating surplus of $19.4 million in the year to March 31st 2010.

According to Fitch Ratings Agency, HBS stands to gain more from the proposed merger and expects the merger to deliver a big and more robust financial institution, adding that the two units are a “good cultural fit.”  SBS will gain a deeper footing in Hawkes Bay, while HBS will benefit from broader access to funding, products and distribution.

However, the financial effects of the merger are modest as both banks already have high liquidity levels and capital and conservative risk appetites, the agency said. SBS Bank is New Zealand’s only member-owned community bank and may be the only building society in the world to have achieved bank registration while maintaining its mutual structure.