Ferrovial may be forced to put up or shut up on BAA bid

The Spanish construction group, which is heading a consortium so far comprising the investment arm of the Singaporean government and a Canadian fund management company, said more than four weeks ago it was mulling a cash bid.

Since then, BAA shares have soared as investors have bet that Ferrovial will take a tilt at the owner of London's Gatwick, Heathrow and Stansted and four other UK airports. The US investment bank Citigroup continues to beaver away on behalf of Ferrovial, but BAA is still left hanging. The Takeover Panel, which polices mergers and acquisitions, is empowered to compel Ferrovial to formalise its intentions or walk away.

While BAA remained tight-lipped, a source familiar with the situation said: "It's clearly an option for them [BAA], and an option that is becoming increasingly attractive by the day."

The City is betting that the Spanish will make a move well before the end of next week. It was speculated that an offer could come within days.

BAA shares advanced a further 16p to 830p on hopes of a bidding war for the company, which analysts say is likely to start at about £10bn.

It emerged that the Australian investment bank Macquarie, which recently dropped its ambitions towards the London Stock Exchange, has approached the US private-equity group Blackstone about putting together a bid. Those talks are understood to be in their infancy and no decision is likely before the Spanish move forward.

Blackstone recently raised $13.5bn (£7.8bn) for a private-equity fund, the biggest to date.

Ferrovial, which owns Bristol airport in a joint venture with Macquarie, is believed to be working with the Spanish bank Santander and Royal Bank of Scotland on financing for a bid. Citigroup may help there too.

Both potential buyers have sounded out Ontario Teachers' Pension Plan about whether the Canadian investor wants to pitch in. Macquarie and its associated funds have built a privately owned airports groups second in size to BAA. They hold controlling stakes in airports in Copenhagen, Brussels and Rome.