BAA to offer investors £1bn in defence against Ferrovial bid

The airports operator BAA is set to return up to £1bn to shareholders as part of a package of sweeteners as it tries to fend off a hostile £8.75bn bid from Spain's Ferrovial.

BAA, which owns seven UK airports including Heathrow, has rejected the 810p-a-share takeover bid as too low. BAA's shares closed at 836p on Friday, giving the group a market value of more than £9bn. That suggests the market is holding out for a higher offer from Ferrovial or another bidder. BAA has also rebuffed an informal approach from a consortium led by the US investment bank Goldman Sachs.

The group's defence document, expected this week, will spell out in detail why Ferrovial's offer does not reflect the true value of the company, and will seek to persuade investors of BAA's growth prospects.

BAA has until next Monday to come up with its defence against Ferrovial's offer. Ferrovial must make its final offer by 5 June and shareholders will then have 14 days to decide whether to accept.