Melbourne Airport cleared for catfight

The hitherto quiet and behind the scenes catfight between fund manager Dexus and the operator of Melbourne's Tullamarine airport has finally spilled into the open. Unlike most commercial disputes, this one would appear unsolvable by compromise, with the non-Dexus directors of Australia Pacific Airports Corporation (APAC) unanimously determined to see a large chunk of its shares currently managed by Dexus sold on the open market.

In all my 46 years of reporting on financial markets, I cannot recall a major company using legal recourse to force a major shareholder to sell down its holding, on terms probably unfavourable to the shareholder, for an alleged breach of confidentiality. If APAC wins the argument – which will likely be determined by the courts – this will be one for the law books. Indeed, there could not be a courtroom in Sydney or Melbourne big enough to accommodate the platoon of barristers required to represent all of the interested parties. This will be a lawyers' picnic par excellence and, indeed, someone really should be taking bets on which will be ready first: a final judgment in this dispute, or the inaugural service of the Melbourne Airport Rail Link. Both may be highlights of the 2060s. 

The stakes for Dexus are high. If it loses, and is forced to offload assets with a book value of $3.8 billion at a lesser price, its reputation with the large pension fund and sophisticated investors that are its lifeblood will be deeply damaged. In the worst-case scenario, which would also take years to unfold, Dexus might be required to compensate investors in its various funds.