angels
8th Feb 2006, 10:58
Not sure if this is the right forum, but the following ran on Reuters earlier on.
Edited to put the latest as of 1247z.
Spain's Ferrovial says may bid for UK's BAA
(Adds more analyst comment, shares, background, valuation)
By Michael Smith
LONDON, Feb 8 (Reuters) - Spain's Grupo Ferrovial <FER.MC> said it was considering a bid for Britain's BAA Plc <BAA.L>, sending shares in the world's biggest airport operator 22 percent higher to value it at 8.5 billion pounds ($15 billion).
Ferrovial, a construction giant which has been diversifying into infrastructure services, said on Wednesday it had not yet approached BAA, the operator of London's Heathrow Airport, but any offer was likely to be in cash and as part of a consortium.
Shares in BAA, which also owns London's fast-growing Stansted and Gatwick airports, leapt to a record 801 pence on the news, but some analysts said the Spanish firm could face regulatory and political opposition.
"BAA is certainly an attractive investment but there will be significant regulatory hurdles. Would the UK government allow a foreign company to hold a key UK strategic asset such as airports?" Exane BNP Paribas analyst Nick van den Brul asked. "And there could be a monopoly issue for Ferrovial."
Ferrovial already has a stake in Britain's Bristol Airport in a joint venture with Australia's Macquarie Airports <MAP.AX>. BAA owns seven British airports.
BAA declined to comment on Ferrovial's announcement but said it would issue a statement later on Wednesday.
Any bid would follow a string of takeovers of British firms by foreign predators -- including Spanish bank Santander's <SAN.MC> acquisition of mortgage lender Abbey -- and comes amid keen investor interest in the privatisation of European airports as low-fares airlines spearhead rapid passenger growth.
Ferrovial has traditionally made most of its profits from Spain's booming building industry, but more recently has expanded overseas and into infrastructure services to offset cyclical construction operations.
Last August, the group bought airport handling firm Swissport and said in September it planned to bid for contracts to run Spanish airport services.
AIRPORT BOOM
BAA, which has enjoyed consistent profit growth as the number of passengers passing through its airports soars, fought off Germany's Hochtief <HOTG.DE> in December to buy control of Hungary's Budapest airport from the state for $2.2 billion.
BAA also has stakes in airports in Australia, Italy and the United States.
Other analysts said an approach takeover could lead to lucrative spin-offs of BAA assets or lead to counterbids.
"The buyer could sell off the Scottish airports, for example, or its overseas management business," one sector analyst, who declined to be named, said.
At 1225 GMT, BAA shares were 19 percent higher at 778 pence and Ferrovial stock was up 3.7 percent at 67.00 euros. Some analysts said Wednesday's share price rise overvalued BAA.
"According to my valuation, the current market capitalisation of BAA is already higher than what's fair value. If they pay over current market cap, then they're already paying a premium," Frank Skodzik at WestLB said.
The cost of insuring BAA debt soared. Five-year default swaps jumped 65 basis points to 100 b.p., one dealer said, meaning it costs 100,000 euros ($119,900) a year to insure 10 million euros of BAA debt against default.
Another quoted the default swaps at 90 basis points.
BAA sold nearly 3 billion euros worth of bonds last week -- its biggest-ever debt sale -- to refinance its purchase of Budapest Airport and fund capital expenditure.
Frankfurt airport operator Fraport <FRAG.DE> said it was not interested in joining any consortium bidding for BAA.
A spokeswoman for Australia's Macquarie Airports <MAP.AX> declined to comment on whether it was interested but a source familiar with the matter said Macquarie had not been approached to be part of a consortium.
Other sources said news of a possible bid took BAA by surprise and came after Ferrovial was forced to release a statement after details of its potential bid leaked to the market, they said.
Foreign spending on British firms is at its highest since the peak of the dot-com boom five years ago and more multi-billion-pound takeovers could come this year with takeover talk have recently surfaced around the likes of Scottish Power <SPW.L>, Centrica <CNA.L> and Lloyds TSB Group <LLOY.L>.
British industrial gases supplier BOC <BOC.L> is the target of a 7.6 billion pound takeover offer from German rival Linde <LING.DE> and British ports and ferries group P&O <PO.L> is still the subject of a $7 billion bidding war.
REUTERS
Edited to put the latest as of 1247z.
Spain's Ferrovial says may bid for UK's BAA
(Adds more analyst comment, shares, background, valuation)
By Michael Smith
LONDON, Feb 8 (Reuters) - Spain's Grupo Ferrovial <FER.MC> said it was considering a bid for Britain's BAA Plc <BAA.L>, sending shares in the world's biggest airport operator 22 percent higher to value it at 8.5 billion pounds ($15 billion).
Ferrovial, a construction giant which has been diversifying into infrastructure services, said on Wednesday it had not yet approached BAA, the operator of London's Heathrow Airport, but any offer was likely to be in cash and as part of a consortium.
Shares in BAA, which also owns London's fast-growing Stansted and Gatwick airports, leapt to a record 801 pence on the news, but some analysts said the Spanish firm could face regulatory and political opposition.
"BAA is certainly an attractive investment but there will be significant regulatory hurdles. Would the UK government allow a foreign company to hold a key UK strategic asset such as airports?" Exane BNP Paribas analyst Nick van den Brul asked. "And there could be a monopoly issue for Ferrovial."
Ferrovial already has a stake in Britain's Bristol Airport in a joint venture with Australia's Macquarie Airports <MAP.AX>. BAA owns seven British airports.
BAA declined to comment on Ferrovial's announcement but said it would issue a statement later on Wednesday.
Any bid would follow a string of takeovers of British firms by foreign predators -- including Spanish bank Santander's <SAN.MC> acquisition of mortgage lender Abbey -- and comes amid keen investor interest in the privatisation of European airports as low-fares airlines spearhead rapid passenger growth.
Ferrovial has traditionally made most of its profits from Spain's booming building industry, but more recently has expanded overseas and into infrastructure services to offset cyclical construction operations.
Last August, the group bought airport handling firm Swissport and said in September it planned to bid for contracts to run Spanish airport services.
AIRPORT BOOM
BAA, which has enjoyed consistent profit growth as the number of passengers passing through its airports soars, fought off Germany's Hochtief <HOTG.DE> in December to buy control of Hungary's Budapest airport from the state for $2.2 billion.
BAA also has stakes in airports in Australia, Italy and the United States.
Other analysts said an approach takeover could lead to lucrative spin-offs of BAA assets or lead to counterbids.
"The buyer could sell off the Scottish airports, for example, or its overseas management business," one sector analyst, who declined to be named, said.
At 1225 GMT, BAA shares were 19 percent higher at 778 pence and Ferrovial stock was up 3.7 percent at 67.00 euros. Some analysts said Wednesday's share price rise overvalued BAA.
"According to my valuation, the current market capitalisation of BAA is already higher than what's fair value. If they pay over current market cap, then they're already paying a premium," Frank Skodzik at WestLB said.
The cost of insuring BAA debt soared. Five-year default swaps jumped 65 basis points to 100 b.p., one dealer said, meaning it costs 100,000 euros ($119,900) a year to insure 10 million euros of BAA debt against default.
Another quoted the default swaps at 90 basis points.
BAA sold nearly 3 billion euros worth of bonds last week -- its biggest-ever debt sale -- to refinance its purchase of Budapest Airport and fund capital expenditure.
Frankfurt airport operator Fraport <FRAG.DE> said it was not interested in joining any consortium bidding for BAA.
A spokeswoman for Australia's Macquarie Airports <MAP.AX> declined to comment on whether it was interested but a source familiar with the matter said Macquarie had not been approached to be part of a consortium.
Other sources said news of a possible bid took BAA by surprise and came after Ferrovial was forced to release a statement after details of its potential bid leaked to the market, they said.
Foreign spending on British firms is at its highest since the peak of the dot-com boom five years ago and more multi-billion-pound takeovers could come this year with takeover talk have recently surfaced around the likes of Scottish Power <SPW.L>, Centrica <CNA.L> and Lloyds TSB Group <LLOY.L>.
British industrial gases supplier BOC <BOC.L> is the target of a 7.6 billion pound takeover offer from German rival Linde <LING.DE> and British ports and ferries group P&O <PO.L> is still the subject of a $7 billion bidding war.
REUTERS