BAA rejects £9.4bn Goldman offer
Monday 17 April 2006
BAA, which runs Britain's biggest airports including Heathrow, Gatwick and Stansted, stressed that the offer had been "preliminary" and "highly conditional". The conditions set included final approval for a deal from the relevant investment committees of the individual members of the consortium, due diligence by the consortium, its advisers and financiers and a recommendation from BAA's board.
The news of Goldman's bid kicks Ferrovial's 810p-a-share offer for the company into touch. The Spanish group's proposal was also rejected this month by the airports operator.
Analysts believe that any attempt to buy BAA will have to be pitched at more than 900p if it is to be successful. Most calculate that the company's assets are worth about 780p, although research by JP Morgan suggested this figure should be closer to 830p, excluding the customary 25 per cent bid premium traditionally seen in takeover situations.
BAA shares closed at 841.5p on Thursday, the last day of trade before the Easter holidays.
Ferrovial plans to push on with its offer. It is expected to trigger the beginning of the formal timetable under Takeover Panel rules when it posts its offer document to BAA shareholders in the next three weeks.
Presently, it has two partners - Caisse de Dépôt et Placement du Québec, a Canadian pension fund, and GIC, an investment arm of the Singaporean government. It is being advised by Australia's Macquarie Bank, to which it will sell stakes in the Sydney and Bristol airports if the bid goes through.
The Civil Aviation Authority, Britain's aviation regulator, recently warned that anyone wanting to buy BAA should plan for the major upgrades to airport facilities expected from the company in the coming years. The group is due to spend £2.2bn on a second runway at Stansted and has earmarked £1.5bn for a fifth Terminal at Heathrow. The latter will open in March 2008.
Goldman Sachs' offer is believed to have been spearheaded by Bill Young who runs its infrastructure investment fund. The knock back from BAA is the fourth the US investment bank has suffered in the past three weeks from a major UK-listed company. Last week, a buyout offer for the All Bar One owner Mitchells & Butlers was blown apart after Goldman, which was acting as its financial advisor and funding provider, decided to abandon the consortium.
Similarly, at the start of the month, ITV's board brushed aside a move on the broadcaster by a Goldman consortium featuring Greg Dyke, the former director general of the BBC. At the end of March, Associated British Ports rebuffed a £2.3bn offer from the bank which had teamed up with Canada's Borealis and Singapore's GIC.
Goldman is said to be wary of being involved in hostile takeover battles. In fact, Hank Paulson, the investment bank's chairman and chief executive, was reported to have vetoed the bank's ongoing involvement in the move on Mitchells & Butlers once it was rejected by the board of the pubs operator.
Goldman is not the only financial player to have had takeover offers knocked back. In the retail sector, Kesa Electricals, House of Fraser and HMV rejected private-equity offers this year, as institutional investors have come to realise that financial buyers do not generally bring much to the party that the companies themselves cannot do.
This trend will only add to the pressure on financial firms struggling to find a home for the billions of pounds they have raised from pension funds for buyouts. Goldman's infrastructure fund, which has targeted BAA and AB Ports, is yet to complete its first major deal.
- 1 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 2 Pub landlord captures moment customer falls over on CCTV – just like Del Boy did on Only Fools and Horses
- 4 Frankie Boyle on Scottish independence: 'In the Interests of Unity, F**k Off'
- 5 How to gain confidence and maximise your sexual potential
Boston Marathon runner's search for mystery man she kissed ends with letter from his wife
Frankie Boyle on Scottish independence: 'In the Interests of Unity, F**k Off'
Italian police 'reveal' what Jesus looked like as a young boy
Mysterious 'X-Files' sounds heard miles above the Earth
Met Gala 2015: Beyoncé manages to out-skimp Rihanna, Miley and Kim Kardashian with near-naked ensemble
In defence of liberal democracy
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
Andy McSmith's Sketch: Feisty audience is the real star of an enlightening show
iJobs Money & Business
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...
£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...