Spanish launch 'knockout' BAA bid

By SARAH MARKS FOR MAILONLINE
Updated:

 

SPANISH hostile raider Ferrovial today delivered what it hopes will be a knockout bid of £9.732bn for Heathrow, Gatwick and Stansted airports operator BAA.

The Spaniards are taking their 900p-a-share offer directly to the shareholders after BAA chairman Marcus Agius rejected it following a meeting yesterday with Rafael del Pino, his Ferrovial opposite number.

Although the renewed bid is 11% higher than its previous offer, it falls short of the 940p a share BAA management says the company is worth. Nor would Ferrovial pay the proposed final dividend of 15¼p, bringing the true value of the bid down to 884¾p.

Analysts, however, suggested the revised offer could be enough to win. Michael Carter at ING said: 'We think Ferrovial now has a very good chance of having put down the winning bid.'

BAA shares rocketed to 873½p today, and Carter continued: 'Ferrovial has made the offer at the psychologically important 900p level, which was mentioned many times in the press as where a bid should be.'

The Spanish also set about undermining the BAA defence, saying the 940p valuation was 'not credible' and 'based on a number of highly questionable assumptions'. Ferrovial accused BAA of significant underperformance at its three London airports, claiming that it has failed to generate the level of profits and returns permitted by the regulator.

In particular, it says, BAA has failed to reduce costs as a proportion of overall revenue in the last five years and has not grown passenger numbers as much as it could have.

It also claims the amount of money each passenger spends at the airports has actually gone down in the last two years. BAA prides itself on being the world's leading airport retailer.

In an official response, Agius said: 'We have evaluated the Ferrovial Consortium's revised offer, but the board is clear that it still falls well short of the true value of the company.' Privately, sources said the board was today considering-whether any of Ferrovial's arguments 'merit a direct response'.

BAA chief executive Mike Clasper last week pledged to return £750m to shareholders through a share buyback, and promised to raise the dividend by 40% to 31½p.

Ferrovial's increased offer comes against the backdrop of a possible competition inquiry by the UK authorities, announced last week.Today Ferrovial attempted to turn the issue to its advantage, arguing that sticking with BAA is no guarantee of future certainty.

But some BAA investors have suggested an investigation is no bad thing. Breaking up the three London airports could add 100p to the value of the BAA share price.

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