Government ready to act on airports bid

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The Independent Online

The Government has indicated that it is prepared to intervene over Ferrovial's attempt to buy BAA, the owner of Heathrow and Gatwick, if a deal threatens its long-term strategy for the UK's airports.

The Department for Transport is thought to be concerned that, should the Spanish construction giant acquire BAA, its plans to develop Stansted as London's third airport will suffer.

"We would be very concerned if it emerged that they wanted to milk the airport for cash and not continue with the investment BAA has agreed to," said a well-placed source. BAA is spending £3bn on Stansted and £4bn building a fifth terminal at Heathrow.

BAA's executives are understood to have spoken with the Government already about the possible approach, first revealed on Wednesday. "There's a whole range of complexities which are going to have to be negotiated before we even think about monetary terms," said one insider. There are clearly issues about what this means for UK aviation and what could happen to the Government's policies. There's an element of this that's about UK plc."

The news of Ferrovial's interest stunned the City, as BAA was not considered vulnerable to takeover. But those close to BAA say it had been concerned for some time that a bidder might emerge.

There are also concerns about Heathrow's future. Lord Soley, the campaign director for Future Heathrow, which is fighting for a third runway, said: "If there's a takeover, I will be talking as fast as possible to the new owners as I would be worried. The question is whether [Ferrovial] would use Heathrow as a point-to-point airport. I am sure the Government will ask that and I am sure it will be very agitated if it loses its hub status."

Spanish insiders are believed to be confident that Ferrovial, which is considering a cash offer, will be able to work with the Government. It is involved in London Underground through the Tube Lines consortium.

BAA, which was privatised 19 years ago, has debts of around £5bn and some believe Ferrovial may need to offer 900p, costing it a total of £15bn. BAA's shares closed on Friday at 779p, giving it a market value of £8.4bn.

Other parties thought to be casting an eye over BAA include Australian bank Macquarie - although it could eventually partner Ferrovial - and Star Capital Investments. Ferrovial and Macquarie jointly own Bristol airport.

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