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20 April, 2006 - 13:18 By Staff Reporter

BAA mounts hostile bid defence

Stansted Airport owner BAA has bunkered down to prepare a defence document to fight off a hostile bid from the Grupo Ferrovial consortium.

Business Weekly understands that BAA remains determined to fend off any renewed bid by the Spanish company to take the airport operation business and break it up.

Directors plan to set a hard-hitting appraisal to shareholders warning them not to sell out when the UK group holds such promise for the long-term as it spearheads airport development in the South East for the UK government.

With BAA’s share price having been nudged considerably higher as a result of Ferrovial’s original offer, shareholders may feel they are already receiving more value for their stock without taking the gamble on a change of ownership.

BAA revealed last weekend that it had turned down a second takeover approach - from a consortium led by US investment bank Goldman Sachs.

The City is speculating that insurer AIG is part of the consortium and that fellow US giant General Electric may also be set to participate.

Both the Ferrovial and Goldman Sachs consortia want to engage BAA in talks and look at the books and BAA is expecting a fresh offer from both parties in the very near future.

While both bidders are now set to target BAA shareholders direct to set out their proposals, BAA directors and advisers are already working on the fine detail of their own charm offensive.

It is believed that BAA’s institutional backers are determined to hold out for at least 900p a share, valuing the company at around £9.75bn.

But even then, the future of the company under such aggressive new ownership remains in the melting pot. A break up looks certain and that may not be in the interests of BAA’s shareholders or the UK’s long-term air transport strategy.

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