Spaniards win £10bn bid battle for BAA
Spanish roads and infrastructure group Ferrovial has won a £10 billion-plus battle to take over BAA, the UK airports operator that owns Stansted.Spanish roads and infrastructure group Ferrovial has won a £10 billion-plus battle to take over BAA, the UK airports operator that owns Stansted.
Ferrovial fended off a £10.3bn rival bid from an international consortium led by investment bank Goldman Sachs and clinched an agreement in dramatic late-night talks with BAA management.
Business Weekly understands that a pledge to continue multi-billion pound investment in BAA’s leading airports – Heathrow and Stansted – was key to the deal.
BAA came down heavily in favour of Ferrovial as the best commercial and cultural fit in a behind-scenes auction.
If BAA shareholders accept the board’s recommendation and the deal gets through UK competition tsars, Ferrovial will plough ahead with a second runway at Stansted in line with the UK government’s long-term aviation strategy.
Sources close to the situation claim BAA directors feared the group could be broken up by the Goldman Sachs consortium, led from New York but global in profile.
While BAA had already privately decided that it would be prepared to sell Gatwick for around £2.5bn to appease competition authorities, it wasn’t prepared to see growth plans for Stansted and Heathrow jeopardised.
Goldman Sachs’ view is not known. Persistent attempts by Business Weekly over the last four weeks to elicit a response from Goldman Sachs on its aggressive acquisition strategy in the UK have failed to elicit a response.
It is believed that the Goldman Sachs consortium was offering 940p per BAA share. BAA investors would also have received a final dividend of 15.25p per share. That 955.25p was at a considerable premium to this morning’s breaking BAA share price of 928p.
Heathrow and Stansted are set to enjoy further significant growth, grabbing a large share of burgeoning traffic in Europe – expected to double to 2 billion passengers by 2020.
As well as this long term visibility, investors are also drawn by the ancilary money-making opportunities from airline landing fees and airside businesses, principally leases for shops and restaurants.
Stansted landing fees for airlines are due to rise significantly, in line with CAA guidelines, and an increasing number of international carriers – both short and long haul – are choosing Stansted as a double portal to London and Cambridge.
One BAA insider described Stansted as BAA’s “star of the east.”
Stansted’s two transatlantic airlines – MaxJet and eos – are said to be doing well and talks are advanced with carriers concerning direct links to Gulf destinations such as Dubai and Oman.
The Office of Fair Trading announced before Ferrovial and Goldman Sachs went head to head that it was about to probe BAA’s monopoly of London airports. This could lead to a recommendation to the Competition Commission to order a break-up of the group.
Under new ownership, that will now almost certainly happen without the authorities getting involved – Stansted and Heathrow staying and Gatwick going – as Business Weekly has exclusively revealed previously.
• Ryanair, Europe’s largest low fares airline meanwhile announced record after tax profits of 302m Euros – some 7m Euros ahead of previous expectations.
Traffic grew by 26 per cent to 35m passengers, yields were up 1 per cent as total revenues grew by 28 per cent to 1.69 billion Euros.
Despite substantially higher fuel costs, Ryanair achieved an 18 per cent after-tax margin, as adjusted net profits increased for the year by 12 per cent to 302m Euros.