BAA meets to consider Ferrovial's higher offer

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The board of BAA met last night to consider a higher takeover offer from Ferrovial after an earlier dawn raid by the Spanish construction group had failed to secure a blocking stake in the airports operator.

It is not known how much Ferrovial is prepared to raise its 900p-a-share offer by, and BAA would not comment beyond confirming that a board meeting had taken place.

Earlier, Ferrovial had failed to buy a stake of more than 10 per cent in BAA to deter a potential rival bid from Goldman Sachs.By close of trading, only 60 million BAA shares had changed hands, representing less than 6 per cent of the company, leaving Citigroup, Ferrovial's broker, empty-handed.

Market sources said that Citigroup had offered to buy 150 million BAA shares - equivalent to just under 14 per cent of the company - at 900p, the same price as it has offered for BAA. In the end, Citigroup is said to have been offered only 30 million shares and chose not to buy any at all.

The failed stock market raid came 72 hours before Ferrovial and its two partners - the Canadian pension fund investor CDP and the private equity arm of the Singapore government - had to decide whether to raise their offer. Under takeover rules, the Ferrovial consortium had until Monday evening to improve on its 900p offer, which values BAA at £9.73bn.

The Goldman's consortium made an indicative approach to BAA worth 870p two months ago. The Takeover Panel yesterday gave it a "put up or shut up" deadline of next Friday to made a formal bid.

News of Ferrovial's share-buying attempts sent BAA stock 3 per cent higher to an all-time peak of 905p, putting the shares above the value of the Ferrovial offer for the first time.

The BAA board, chaired by Marcus Agius, had earlier rejected the 900p price as an attempt to buy the company "on the cheap", claiming it is worth more than 940p. A number of leading shareholders are thought to be ready to accept a bid of 950p, which would value BAA at £10.3bn.

Market watchers were puzzled by Ferrovial's stake-building attempts which could have left it nursing big losses if its bid for BAA fails. Before its initial approach in February, BAA shares were trading at below 650p.

The Office of Fair Trading is deciding whether to refer BAA to the Competition Commission - a move which could result in the break-up of its monopoly over the three London airports.