The battle looked lost for BAA when it said it was "not willing" to increase its offer any further. The company said it was not prepared to "spend shareholders' money on an unrealistic valuation." A spokesman for SwissAir's advisers, SBC Warburg, was understandably more upbeat. "It looks like the end of the story," he said.
SwissAir's coup de grace capped a day of dramatic events which saw both companies increase their offers within hours of each other.
BAA led the way when it increased its original pounds 130m agreed deal by pounds 15m to match SwissAir's proposal. SwissAir then trumped it with a pounds 160m offer in the afternoon.
It is not yet clear whether or not BAA will withdraw its lower offer or still present it to Allders shareholders at an emergency meeting which is due to take place next Monday. BAA is expected to decide today if it will withdraw. If the meeting does take place and the offer is voted down, another meeting will have to be convened to approve the SwissAir deal.
Licking its wounds, BAA said it had already stated that it could see other ways in which it could develop its duty-free business and would now explore those alternatives.
The auction has been good news for Allders shareholders, who saw the group's shares rise a further 16p to 216p yesterday. Allders said: "We acknowledge that there is now a firm offer on the table from SwissAir. We now have to resolve some of the technical issues relating to that offer as quickly as possible in order to confidently put it to our shareholders in a form which is capable of being approved."
SwissAir representatives said they were confident they could make the Allders International business pay at the pounds 160m valuation. They said SwissAir recognised that the UK airport outlets would not be part of the deal as the management contracts will be taken up by BAA, which operates the airports. It also recognises that duty-free shopping may disappear in Europe from 1999. However, they said that the store rental agreements were due for re-negotiation at the same time and that the new deals would reflect any European Union decision.
The company added that airport retailing was a fast-growing market.