BAA, the airports operator which owns Heathrow, Gatwick and Stansted, was bracing itself last night for an £8bn-plus takeover bid from Spain after the construction giant Ferrovial said it was considering a cash offer as part of a consortium.
If it does launch an offer, it would be as part of a financial grouping. Investment houses linked with the deal include Goldman Sachs, Deutsche Bank, ABN Amro, Guy Hands' Terra Firma and 3i. Goldman Sachs has raised $3bn (£1.7bn) for an infrastructure fund while ABN Amro is raising €1bn (£690m) to invest in infrastructure projects.
The potential bid is the latest overseas tilt at a major British company and the most daring to date, given BAA's huge strategic importance as the monopoly airport provider in south-east England.
BAA, which owns seven UK airports and handles 140 million passengers a year, said it had not received any proposal from Ferrovial and "strongly advised" shareholders not to take any action.
Ferrovial's announcement that it was considering an offer was forced out of it by the Takeover Panel after BAA shares began to surge, fuelled by rumours in Madrid of an impending bid. BAA shares closed up 15 per cent at 752.5p last night, valuing the company at £8.1bn. The shares were 22 per cent higher at one stage in the day.
Any takeover of BAA would cost the bidder at least £13bn because it also has £5bn of debt on its books. On top of that it has a £7bn investment programme over the next nine years, not including the £2bn-£4bn that a second runway at Stansted would cost.
Ferrovial, which owns Belfast City airport, a half share in Bristol airport and two-thirds of the London Underground consortium Tube Lines, said its bid preparations were at an early stage and there was no certainty of any offer being made.
The Spanish company would not launch a hostile bid, meaning any offer would have to be recommended by the BAA board, but it is not clear whether or when the Spanish plan to approach the board of the company, led by the chairman, Marcus Agius, a former investment banker, and the chief executive, Mike Clasper.
Any bid is certain to raise a number of public interest issues since BAA is primarily responsible for carrying out the Government's policy of building more airport capacity in the South-east. In addition to the second Stansted runway, it is considering a £1.5bn investment in a complete overhaul of Heathrow's central terminal area in addition to the £4bn already being spent on Terminal 5, which opens in 2008.
Public interest issues are likely to centre on whether a financial consortium with short-term horizons would be prepared to invest for the long-term development of BAA's three south-east airports. There are also questions over the tax breaks Ferrovial, in common with other Spanish companies, gets to expand abroad.
BAA lost the protection of its golden share, enabling the Government to block an unwelcome foreign takeover three years ago. A spokesman for the Department for Transport said: "These are two businesses owned by shareholders and we have no powers to intervene in private companies doing deals."
However, he added that if a bid were to be made it would raise issues of "strategic interest" upon which the Government would have a view. A spokeswoman for the Civil Aviation Authority, the economic regulator of the three south-east airports, said its remit would be limited to looking at the safety issues involved in any change of ownership.
The Stop Stansted Expansion campaign welcomed Ferrovial's move, saying it would refocus attention on the lack of commercial justification for the second runway.
How 'King of the Bricks' set Ferrovial on road to overseas expansion
Grupo Ferrovial is Spain's second-biggest construction company afterACS. A family-run business, it was set up by Rafael Del Pino in 1952. Known as "El Rey de los Ladrillos" - or King of Bricks - Mr Del Pino had a more flamboyant profile than his son Rafael, who became chairman in 2000.
Ferrovial, which owns Amey in the UK, aims to become one of the leading investors in airports worldwide. It has 50 per cent stakes in Bristol and Belfast City airports and smaller stakes in airports in Australia and Chile, handling35 million passengers a year.
The Spanish group, which is 57 per cent-owned by the del Pino family, is also involved in infrastructure projects such as toll roads and is part of the Tube Lines consortium redeveloping the London Underground (LU), through its subsidiary Amey. Tube Lines is a 30-year contract to manage three LU lines.
This year Ferrovialwon a contract to build 400 schools in Bradford. Street cleaning, industrial waste collection and green spaces and facility management are also part of its core businesses.
Ferrovial has annual revenues of nearly £7.3bn and a stock market value of £5.5bn. In recent years, the company has sought new markets in the UK, Poland, Portugal, Ireland, Italy, Switzerland, the US, Canada, Australia and Latin America.
Gonzales Moros, a noted Spanish construction analyst, said: "This [deal] makes sense for Ferrovial: it would offer greater diversification - they already have a presence in the UK and they know airport management."
Mr Del Pino Jnr was ranked 56th most influential man in Spain in the annual Power List published by El Mundo newspaper.
Graham Keeley in Barcelona
Armada sails into UK waters
April 2003 -Grupo Ferrovial acquires Amey, the UK support services group, for £81m
November 2004 - Abertis Infraestructuras, a listed Spanish infrastructure group, acquires the Luton airport owner, TBI, for £551.2m
October 2004 - Banco Santander Central Hispano, Spain's largest bank, takes over Abbey, in a £9.5bn deal
October 2005 - Telefónica successfully bids £17.77bn for the mobile phone group O2
February 2006 - Grupo Ferrovial says its might bid for the Heathrow, Gatwick and Stansted owner, BAAReuse content