Low-ball offer

17 March 2006

After a five week wait, the Spanish construction firm has come up with a "possible" £8.7bn offer at below BAA’s market price. Not that the UK airport operator should just sit back. It needs a good financial defence as Ferrovial may well come back with more.

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Spanish construction firm Grupo Ferrovial SA made an unsolicited £8.7bn preconditional offer for BAA. The owner of London's Heathrow and Gatwick airports, rejected it.

Ferrovial and partners said they had submitted the outlines of a possible 810p a share cash offer.

The conditions are that BAA accepts due diligence, that its board recommends the offer and that there is agreement with its pension trustees and the pensions regulator on any additional contributions to its pension scheme.

Ferrovial added that if the preconditions were satisfied, it would be willing to increase the bid by a small increment.

Ferrovial will own 60% of the equity of the consortium's bidding for BAA. Its partners are Canadian pensionfund manager Caisse de depot et placement du Quebec and GIC Special Investments Pte Ltd., the private equity arm of the Singapore government.

Ferrovial said terms sheets had been signed with Citigroup, Royal Bank of Scotland and Santander, to provide the debt finance for the bid.

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