LONDON airports monopoly operator BAA today told Spanish raider Ferrovial it needs to do a whole lot better than its 810pa-share, GBP8.75 billion takeover offer after producing data it says shows its main airports are worth GBP9.9 billion - or well above GBP10 a share on their own.
In an end-of-financial-year trading update that in the light of Ferrovial's approach reads like a shadow defence document, BAA said the "regulated asset base" value of its London airports - Heathrow, Gatwick and Stansted - has soared after GBP1.5 billion of spending last year.
Of that, another GBP1 billion was spent on its new Terminal 5 at Heathrow, home of British Airways from 2008, which will be capable of handling 30 million passengers and is set to transform the chronicallycongested international hub.
That spending has lifted net debt by about 50% in the last six months to GBP5.3 billion - another factor to be weighed by potential bidders.
In a statement in which BAA admitted passenger growth had stalled to just above 2% this year during which time operating costs have leapt by 8% because of higher staff costs, energy prices and business rates, chief executive Mike Clasper laid down why Ferrovial is undervaluing BAA.
"The group is on track to deliver trading performance for the year in line with our expectations, a good result given the impact of a softer UK economy and increased security requirements," he said.
"The momentum we are seeing right across the business, particularly with the integration of Budapest Airport [bought in December for GBP1.25 billion], the progress of Terminal 5 and the implementing of the 'delivering excellence' programme [saving GBP45 million a year at a cost of 700 jobs], adds to our confidence that as we move forward we will deliver enhanced value for shareholders."
BAA shares opened today at 832p, ahead of the indicative bid tabled by Ferrovial.