Shareholders put £9.5bn price tag on BAA

The Spanish company looking to land airports operator BAA was today told it must come up with a bid worth around £9.5bn (€13.9bn) for the Heathrow owner.

The value suggested by BAA’s leading shareholders represents a 15% premium on the current BAA share price of 779p, even though the stock has soared following infrastructure company Ferrovial’s revelation that it was mulling an offer.

Robert Waugh, head of UK equities at fund manager Scottish Widows, BAA’s top shareholder with a 3.1% stake, said that a 900p a share offer was based on the “fair value” of BAA and accounting provisions that would allow Ferrovial to achieve a tax break worth 50p a share.

He said in the Sunday Times: “Shareholders want something beginning with a nine. The company will struggle to defend the bid at this level.”

BAA will also be told by investors this week that it will have to come up with plans to deliver greater value if it is to fight off any proposal. One option could be to split BAA into an operating company and a property group.

The interest from Ferrovial, which it has indicated is likely to come as part of a consortium, shocked the City and airline industry on Wednesday.

BAA is seen as key to delivering the government’s airport policies, such as the construction of a new Stansted runway and a possible new runway at Heathrow. BAA also owns Gatwick, Aberdeen, Edinburgh, Glasgow and Southampton airports.

Ferrovial’s interest has drawn support from Ryanair chief executive Michael O’Leary, who has long campaigned for the break-up of BAA.

He told the Sunday Express that a change in the company’s ownership would be excellent news for airlines and passengers if it ended BAA’s “unhealthy domination” over airports in the South-East.

Mr O’Leary added: “A break-up of BAA would be the greatest thing that has happened to British aviation since the founding of Ryanair.

“Putting all of the London airports together in one monopoly leads to high charges and the construction of marble palaces.”

The Spanish company would not be able to alter charges directly as these are regulated by the Civil Aviation Authority.