ATW Daily News

Ferrovial closer to BAA takeover after Goldman Sachs withdraws

Friday June 9, 2006

Ferrovial Group moved closer to completing its takeover of BAA yesterday as rival Goldman Sachs pulled out after the Spanish firm purchased an additional 12.9% of the UK airports operator's shares.Goldman had been considering increasing its rival bid for BAA but announced yesterday that it no longer was interested after Ferrovial upped its stake to 28.7%.

BAA's board endorsed Ferrovial's final bid of £10.1 billion ($19 billion) Tuesday (ATWOnline, June 7), but Goldman had until June 16 to increase its rejected counter-bid, which was slightly higher than the Ferrovial offer. The Spanish firm's control of more than a quarter of BAA's shares, however, diminished the chances that another bidder could woo shareholders. BAA's board also would have had to pay Ferrovial a £115 million "break fee" if it switched its endorsement to Goldman, another factor that did not favor the US investment firm.

BAA shareholders have until June 26 to approve the takeover, which now appears to be a formality. But Ferrovial likely will have to face a UK government inquiry into whether BAA's control of the three principal London airports and the two largest Scottish airports (Edinburgh and Glasgow) creates a fair trading environment for airlines and passengers (ATWOnline, May 26). While such an inquiry would not stop the takeover, Ryanair CEO Michael O'Leary and other airline executives are advocating a forced breakup of Heathrow, Gatwick and Stansted regardless of which company has ownership.

Australia's antitrust agency said yesterday it will examine whether Ferrovial, which already owns a 21% stake in Sydney Airport, will gain an unfair competitive advantage by securing stakes in six additional Australian airports in which BAA has minority holdings. Ferrovial previously has said its main interest lies in the UK airports, particularly the London market, and that it may sell off BAA's non-UK assets.

BAA released May traffic figures yesterday that showed the London airports boosting year-over-year throughput by 4%. Stansted led the way with 11.3% growth. For all seven UK airports under BAA control, May passenger totals increased 3.6%, with European scheduled traffic up 6.6%.

by Aaron Karp

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