Macquarie Bank Joins Possible Bid for BAA

An offer, by Spanish construction company, Ferrovial, was rejected earlier this month.


LONDON_Grupo Ferrovial SA's attempt to take over British airports operator BAA PLC got a boost Wednesday when it announced it had appointed Australia's Macquarie Bank Ltd. to advise the consortium whose initial bid was rejected.

Macquarie had been widely perceived as a potential rival bidder for BAA, and analysts said its decision to advise Ferrovial significantly reduced the likelihood of a bidding war.

Ferrovial, a Spanish construction company, proposed buying BAA for 8.8 billion pounds ($15.4 billion) but its offer was rejected earlier this month.

The Australian bank, which recently gave up on a bid for the London Stock Exchange, has significant airport operations through its private equity investment fund Macquarie Airports.

Macquarie said its agreement to become joint financial adviser to the Ferrovial consortium precluded any possible separate bid.

"We now expect the (Ferrovial-led) consortium to become more aggressive price-wise on the bid for BAA without fearing Macquarie's opposition," Banco BPI said in a research note.

BAA shares rose 1.4 percent to 838.5 pence ($14.55) on the London Stock Exchange. That is well above Ferrovial's offer of 810 pence ($14.20) a share, which BAA dismissed on March 17, saying it undervalued the group's assets.

BAA operates seven airports across Britain, including Heathrow, Gatwick and Stansted in London. It also has a long-term contract to run Budapest Airport in Hungary and has stakes in airports in Australia and the United States. BAA said Tuesday it was considering investing in airports in China as passenger growth at its British facilities slows this year.

The group said it expects passenger numbers and retail income from those passengers at its seven airports in Britain to both increase by 2 percent in the year ending March 31, but added that operating costs would climb 8 percent.

Ferrovial has said it would focus on investment in Britain and enhancing airport capacity in southeast England if it was successful in its bid. BAA is already building a fifth terminal with British Airways PLC at Heathrow Airport and a second runway at Stansted to cope with extra demand.

Britain's airspace regulator warned last month that any potential bidder should take into account the expected infrastructure spending and that it was not prepared to raise caps on airport charges so that any bidder could generate enough cash to pay back loans taken out during a takeover.

Ferrovial said Wednesday it had also entered into an agreement with Macquarie Airports in relation to put and call options on the Spanish company's interests in Sydney, Australia and Bristol, England airports.

It said those options can only be exercised if Ferrovial obtains a controlling stake in BAA.

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