BAA Accepts Takeover Bid From Ferrovial

BAA PLC, the world's biggest airport operator, accepted a sweetened 10 billion pound ($19 billion) takeover bid from a consortium led by Spain's Grupo Ferrovial SA on Tuesday, rejecting a higher offer from a group led by Goldman Sachs.

Ferrovial also confirmed it had bought 150 million shares, or 13.9 percent of BAA, in a raid early Tuesday, adding to its existing holdings and bolstering its position against any rival bid.

Having rebuffed Ferrovial's advances since the company's first approach four months ago, BAA said the revised offer - valuing it at 950.25 pence ($17.79) per share - "represents an attractive price for BAA."

The announcement followed a late-night auction between the two consortiums for BAA, which operates seven airports around Britain, a handful in the United States and has a stake in the Naples and Budapest airports.

BAA had confirmed Monday, the day Ferrovial was supposed to post its offer documents, that it was holding talks with both groups.

Ferrovial's bid was lower than the 955.25 pence ($17.86) per share bid put forward by the consortium led by Wall Street investment bank Goldman Sachs Inc., but BAA said Ferrovial's bid had a better strategic rationale.

The offer from Ferrovial is made up of 935 pence ($17.49) in cash and shares and a 15.25 pence (28.52 U.S. cent) per share dividend.

In a filing with the Spanish stock market supervisor CNMV, Ferrovial said shares in the new company would be listed on the AIM market of the London Stock Exchange.

BAA shares gained 2.2 percent to 948.5 pence ($17.85) on the London Stock Exchange, continuing a climb ignited by takeover speculation that has seen it gain some 45 percent since the beginning of the year.

Goldman Sachs urged BAA shareholders to take no action as it is reviewing its position - suggesting the battle may not yet be over.

However, Ferrovial confirmed that it had been active in the market early Tuesday, buying 150 million shares at 950.25 pence ($17.74) per share.

Analysts said that would likely take Ferrovial's entire holding to more than 15 percent and make it more difficult for Goldman Sachs to muscle in because it would need to acquire 90 percent of the company to be able to forcibly buy out minority shareholders.

The Takeover Panel, an independent body that administers London's code on mergers and takeovers, agreed earlier Tuesday to a request from BAA to extend the deadline for offers for the company.

The Spanish-led coalition, which includes Canadian investment fund Caisse de Depot et Placement du Quebec and Singapore government fund GIC, must now post its offer documents by June 12, while the Goldman Sachs consortium has until June 16 to announce a firm bid or walk away.

Ferrovial first approached BAA in March with an offer valued at 810 pence per share. It lifted that to 900 pence last week, but was still rejected. The Goldman Sachs-led group made a preliminary offer of 870 pence a share in May, which BAA also dismissed.

The fight for BAA was further complicated last week when the government's Office of Fair Trading revealed it is considering a full inquiry into the domestic airport market. Such a probe would look at whether the current market structure, and BAA's dominance, delivers the best value for air travelers.

BAA owns and operates airports that handle 63 percent of travelers to and from Britain, a figure that rises to 86 percent in Scotland - where BAA runs airports at Glasgow, Edinburgh and Aberdeen - and to 92 percent in London. BAA also owns Southampton Airport in southern England.

The company's international business includes managing the Indianapolis airport, and retail management at Baltimore, Pittsburgh and Boston-Logan airports.

Ferrovial holds a 60 percent stake in England's Bristol airport and 31 percent of Belfast City airport, and it also manages the Sydney airport in Australia and Antofagasta airport in Chile.

The company also manages 19 toll roads in Spain, Portugal, Ireland, Italy, Chile, Canada and the United States, and is a partner with the state of Texas in designing the $175 billion Trans-Texas Corridor railway and highway project.


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