BAA rejects £9.4bn Goldman offer

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.

Start your day with The Independent, sign up for daily news emails
Ed Miliband and David Cameron are neck and neck in the polls
election 2015Armando Iannucci: on how British politics is broken
Life and Style
Great minds like Einstein don't think alike
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
ebooksA celebration of British elections
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
Chuck Norris pictured in 1996
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
A voter placing a ballot paper in the box at a polling station
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power