Spanish look set to win BAA takeover battle

A Spanish company tonight looked to have won a dramatic £10bn (€14.5bn) takeover battle for control of the UK’s biggest airports.

Infrastructure firm Ferrovial and its backers secured the support of the board of BAA, despite a higher offer fronted by US investment house Goldman Sachs.

Ferrovial said it had no plans to break up the UK estate – featuring seven UK airports including Heathrow, Gatwick and Glasgow – and added it was committed to funding the existing capital expenditure programme of BAA.

BAA spurned the Ferrovial-led consortium for more than three months, but admitted its own valuation had been reached after a late night auction took place ahead of a midnight deadline for Ferrovial to table its final offer.

The successful approach came in at 935p a share – equivalent to £10.11bn (€14.66bn) - but included a pledge to include a final BAA dividend payment, taking the overall value of the offer to 950.25p, or £10.3bn (€14.94bn).

The Goldman Sachs-led consortium, which made an offer worth a total of 955.25p, said it was reviewing its position and urged BAA shareholders to take no action on the Ferrovial offer in the meantime.

Analysts said the fact that Ferrovial was more advanced with its plans may have persuaded BAA to back the lower offer.

Ferrovial, which operates European tolls roads and owns UK infrastructure firm Amey, already holds 50% of Bristol airport, all of Belfast City airport and 20.9% of Sydney airport. It may now sell its Bristol and Sydney stakes to co-owner Macquarie, which acted as financial adviser on the BAA deal.

The Ferrovial bid vehicle – called Airport Development and Investment (ADI) - also includes a Canadian fund manager and private equity arm of the Singapore government.

Ferrovial said ADI aimed to make BAA more efficient, by lowering overheads, outsourcing some operations and improving procurement practices.

It added: “ADI believes this would introduce both a higher degree of flexibility in the operations and best industry practices, resulting in higher service levels overall.”