BAA backs £10.3bn Spanish takeover

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The Independent Online

The airports operator BAA looked set for foreign ownership today after it backed a £10.3 billion takeover offer from Spanish consortium Ferrovial.

The infrastructure group secured the support of the BAA board last night, although a rival bid team led by US-based investment house Goldman Sachs could still scupper its plans with a better offer.

The value of BAA soared overnight as a midnight deadline for Ferrovial to table a new offer led the UK company into talks with both bid teams.

BAA previously put a value of at least 940p a share on its business, but saw Ferrovial come up with an approach worth 950.25p a share last night. That includes the payment of a BAA dividend worth 15.25p a share.

BAA said the proposal represented an attractive price for the company, which owns seven sites including Heathrow and Gatwick.

Goldman Sachs said it continued to review its options after it said it failed with an approach valuing the company at 955.25p a share, including the dividend of 15.25p a share.

BAA may give further details on why it backed the Ferrovial approach later today.

Ferrovial, which operates toll roads in Europe and owns infrastructure firm Amey in the UK, is working with a Canadian fund manager and the private equity investment arm of the Singapore government.

Goldman's consortium includes Colonial First State Global Asset Management, which has investments in Brisbane, Perth and Adelaide airports.

The US company first approached BAA in April as part of a competing offer against the Ferrovial team, which sparked the bid interest in February.

BAA handles 63% of all air passenger journeys starting and ending in the UK, including 92% in the London area, where it operates Heathrow, Stansted and Gatwick, and 86% in Scotland through Glasgow, Aberdeen and Edinburgh.

In its recent bid defence document, BAA said that strong growth and future investment at its London airports, as well as the performance of its non-London airports business, meant its value was much higher than the 900p a share previously offered by Ferrovial.

The chief executive of no-frills service Ryanair, Michael O'Leary, said a takeover might lead to lower costs for passengers and airlines.

"We would hope it would lead to more efficient investment and the building of facilities at terminals that airline passengers actually want, rather than the gold-plated Taj Mahal palaces that the BAA have been building at excessive cost, overcharging passengers and airlines," Mr O'Leary said on the BBC Radio 4 Today programme.

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