Spain's Ferrovial eyes airport operator BAA

Spain's Ferrovial eyes airport operator BAA

	Published : Thu, 09 Feb 2006 11:00 By : Andrew Stead Print this Story

LONDON: Spain's construction major Grupo Ferrovial SA is targeting British airport operator BAA Plc. Ferrovial, which is getting into infrastructure services, said it had not approached BAA so far, but if an offer happens, it will be all cash and will be as part of a consortium.

Ferrovial owns Belfast City airport, holds half of Bristol airport and two-thirds of the London Underground consortium Tube Lines.

The report sent BAA shares up 97 pence to 752.5 pence, valuing it at almost 8 billion pounds. BAA operates London's three main gateways -- Heathrow, Gatwick and Stansted -- and Scotland's primary hubs -- Glasgow and Edinburgh -- and handles 140 million passengers a year.

The bid may confront an immediate problem as investors who bought the 2.85-billion-pound worth of euro bonds issued by BAA 2 February would seek to change the terms of the debt in order to protect their interests.

There are also apprehensions that the Spanish firm may face regulatory issues. Analysts, however, said this can be handled if it sells off some BAA assets.

BAA told its shareholders to do nothing and said it had not yet received a formal proposal.

Sources said the Ferrovial consortium may include Goldman Sachs, Deutsche Bank, ABN Amro, Guy Hands' Terra Firma and 3i.

Analysts are of the opinion that the takeover would cost Ferrovial at least 13 billion pounds, because BAA has some 5 billion pounds in debt. It has also ushered in a 7-billion-pound investment programme over the next nine years, its plans for the second runway at Stansted may cost 2 billion pounds to 4 billion pounds and the overhaul of Heathrow's central terminal may cost 1.5 billion pounds. It has also incurred so far expenses to the tune of 4 billion pounds on Heathrow’s Terminal 5, which is to open in 2008.

Ferrovial is Spain's second largest construction company. It is a family-run business, set up by Rafael Del Pino in 1952 and now 57 per cent-owned by the del Pino family.