BAA rejects Ferrovial bid

BAA rejects Ferrovial bid

	Published : Sat, 18 Mar 2006 20:10 By : James Rowe Print this Story

LONDON: British airports operator BAA Plc. has rejected the 8.75-billion-pound takeover offer from Spanish construction company Grupo Ferrovial SA and its consortium partners, Canada's Caisse de depot et placement du Quebec and Singapore's GIC Special Investments Pte Ltd.

The 810 pence-a-share offer, conditional on a due diligence, a recommendation from the board of BAA and an agreement with the trustees of the company's pension scheme on additional fund requirements, was rejected by BBA's board which said the offer does not reflect the true value of the company's unique portfolio of airport assets. The board said, therefore, it does not think it is in the interests of its shareholders to enter into discussions with Ferrovial.

The company issued a statement to this effect to the stock exchange, without referring it to Ferrovial.

BAA owns and operates seven U.K. airports including Heathrow, Gatwick and Stansted.

Ferrovial has said in its proposal that the consortium would be willing to raise its offer by 'a small increment' if BAA agreed to grant limited due diligence access and recommending the offer.

BAA chairman Marcus Agius said the company is now turning its attention to improve the value of its assets and the quality of its management. He added that delivering enhanced value to the company's shareholders will be the company's first priority.

Ferrovial, which owns part of Bristol airport and Belfast airport, reacted to the report saying it was disappointed. It said the proposal amounted to a 27 per cent premium on BAA's average share price for 30 days to 6 February, the day before the takeover speculation started.

The Spanish company will have more than 60 per cent holding in the consortium, which was created to finance the offer with debt finance from Citigroup, Royal Bank of Scotland and Banco Santander.

BAA has a debt of around 5.25 billion pounds and it has committed to a 10-year 6.8 billion pound expenditure programme for its London airports. It has also on hand the construction of the fifth terminal at Heathrow and a second runway at Stansted.

U.K.'s air transportation regulator the Civil Aviation Authority has clarified that any potential buyer should take into account the expected infrastructure expenditures to meet the expected rise in passenger traffic across the country.

Analysts say any offer that is below 900 pence-a-share is not going to be considered by BAA. BAA's major shareholder Scottish Widows Investment Partnership, which is a unit of Lloyds TSB, had said it would be interested only when the bid crosses 900 pence mark. Analysts also feel there could be counter bids from other investors.

BAA shares were down 7-1/2 pence at 831-1/2 pence.