US giant joins battle to buy BAA

US giant General Electric has emerged as a surprise participant in the battle to buy British airports operator BAA, it was reported today.

GE’s name was raised after BAA revealed yesterday it has spurned a £9.4bn (€13.6bn) approach from a consortium led by the US investment bank Goldman Sachs.

According to the Daily Telegraph, British government sources monitoring BAA’s possible sale said GE was not in the Goldman Sachs consortium at this stage but they expected it to become involved.

Separate sources told the paper GE had expressed an interest in BAA weeks ago.

GE, whose businesses range from credit card financing to servicing jet engines, has refused to comment but said at its first quarter earnings last week it was interested in investing more in airports and toll roads, the paper reports.

Goldman Sachs approached BAA with what is being seen as a “white knight” proposal to rival an offer already on the table from a consortium led by Spanish company Ferrovial.

But BAA’s board rejected the conditional approach, even though it offered 870p a share against the 810p – or £8.75bn (€12.6bn) – being proposed by the infrastructure company Ferrovial.

In a statement released yesterday BAA said the approach from Goldman - received on March 30 – failed to “reflect the true value of the company”.

Goldman is understood to have held talks with potential partners, including the Canadian pension funds Borealis and Ontario Teachers, about putting together a recommended deal. It is seen as a white-knight as Goldman would offer an alternative to Ferrovial.

BAA told Ferrovial that its offer, worth £8.75bn (€12.6bn), “did not begin to reflect the value of BAA’s unique portfolio of airport assets”. It is thought investors are holding out for at least 900p a share – valuing the entire company at around £9.75bn (€14bn).

Last week, it was reported that BAA had drawn up its own plans to ensure it maintained the support of shareholders, including a special dividend of up to £1bn (€1.4bn) and a wide-ranging review of its costs.

BAA’s UK estate is made up of Heathrow, Gatwick, Stansted, Southampton, Aberdeen, Glasgow and Edinburgh airports.

The company also has interests in the United States, Australia, Italy and Hungary, but Ferrovial has said it would focus investment in the UK and enhance capacity, in particular, in south east England.

The Spanish consortium also includes a Canadian fund manager and the private equity investment arm of the Singapore government.

BAA was unavailable for comment.