BAA takeover leads to £315m bonanza for City firms

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The Independent Online

City firms are to share a £315m fees bonanza from the £10.3bn agreed takeover of the airports group BAA by the Spanish construction giant Ferrovial.

Citigroup, the lead adviser on the deal and the arranger of a £7.7bn funding package, will take the biggest slice of the fees. It is thought Citigroup will walk away with more than £75m. The Australian bank Macquarie will also take a chunky fee for supporting Citigroup as financial adviser.

Other banks which will take a split of the fees include HSBC, NM Rothschild, UBS, and ABN Amro's Hoare Govett unit.

A share of the fees for arranging the financing will go to Royal Bank of Scotland, which was co-lead arranger of the financing, along with HSBC, Banco Santander and CDP of Canada.

The lawyers who stand to bag the most are Freshfields and Clifford Chance.

The size of the fees payable over the transaction was revealed in the official offer document, which was received by shareholders yesterday. The document also revealed that the deal will be financed by £4.3bn of equity, together with £7.7bn of debt.

The battle for control of BAA ended in victory for Ferrovial this month after its rival, Goldman Sachs, pulled out of the bidding, leaving the field clear for the Spanish group.

The Ferrovial takeover of the owner of Heathrow, Gatwick and Stansted airports is likely to be followed by a clear-out of the boardroom at BAA and by widespread job cuts elsewhere in the company.

The new Spanish owner is also drawing up plans for a cut-price scheme to build a second runway at Stansted to appease airlines at the Essex airport which are opposed to BAA's plan to spend £2.7bn.

Ferrovial is expected to sell off some of BAA's overseas assets to reduce the company's indebtedness, which will rise to £12bn once the takeover is complete.

It will also hold talks with the Government and the airports regulator, the Civil Aviation Authority, to reassure them that BAA's very high levels of borrowing will not affect its investment programme.

The company, which owns seven UK airports, is planning £9.5bn of expenditure over the next 10 years.

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