Risky business

25 May 2006 By Fiona Maharg-Bravo

The UK competition watchdog’s review of the airport market could conceivably lead to a breakup of BAA’s monopoly. It may undermine BAA’s value. But it could also deter Ferrovial from sweetening its hostile bid.

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The OFT, the UK competition watchdog, said it was considering looking into the UK airports market with a view to establishing whether the current market structure works well for consumers. It said it would decide by the end of June.

The move coincided with the release of BAA's defence document against a hostile bid from Spanish construction group Ferrovial at 810p a share. In it, the UK airports operator said it was worth more than 940p a share. As part of its defence, BAA plans to increase the dividend by 40% this year and 7% the next. It is also planning a £750m share buyback if the company stays independent.

Ferrovial has until the 5 June to improve its current offer.

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