BAA to Merge with Ferrovial for $19 B

Elena
06 Jun, 2006
New York City

The announcement came a day after BAA confirmed that it was in talks with Ferrovial and with another consortium. On Tuesday, Goldman Sachs confirmed that the rival consortium had made a bid of 955.25 pence ($17.98) per share for BAA, including a declared final dividend of 15.25 pence.

[R]8:00AM BAA PLC accepted a 10 billion pound takeover bid.[/R]
Operator of seven airports in Britain BAA PLC agreed to be acquired by a consortium led by Spanish airport operator and engineering company Ferrovial SA. for 10 billion pound ($19 billion) or 950.25 pence ($17.79) per share. The Ferrovial consortium also includes Canadian investment fund Caisse de Depot et Placement du Quebec and Singapore government fund GIC. Last week BAA rejected a 900 pence ($16.81) per share offer from Ferrovial as too low. The announcement came a day after BAA, which operates London's Heathrow, Gatwick and Stansted airports, confirmed that it was in talks with Ferrovial and with another consortium. The Goldman Sachs-led group made a preliminary offer of 870 pence a share in May, which BAA rejected. On Tuesday, Goldman Sachs confirmed that the rival consortium had made a bid of 955.25 pence ($17.98) per share for BAA, including a declared final dividend of 15.25 pence.

Ferrovial said that BAA shareholders could opt to exchange their shares for a combination of cash and shares in a new company. In a filing with the Spanish stock market supervisor, the CNMV, Ferrovial said the shares in the new company would be listed on the AIM market of the LSE. BAA shares gained 2.1% to 947.5 pence ($17.84) in trading on the LSE.


[R]7:30AM Asian stocks track U.S. decline.[/R]
Asian markets closed lower. In Japan, the Nikkei 225 Index fell 1.81% to 15384.86, its lowest close since January 23. Trading exporters led declines. Electronics maker NEC was down 2.27%, Kyocera lost 2.43% and Konica Minolta shed 4.64%. Auto stocks also fell, as Nissan Motor declined 1.93% and Mitsubishi Motor dived 2.9%. In Hong Kong, the Hang Seng Index shed 0.27% to close at 15973.11. Property stocks, constituting a large component of the Hang Seng, declined on interest-rate concerns. The Hong Kong dollar is tied to the U.S. currency, and local interest rates follow those set by the Fed. Property stocks will keep underperforming until the U.S. interest rate cycle kicks in reverse. IPOs kept looming large in Hong Kong, with Shanghai-based developer Shui On Land launching a nearly $1 billion offering to help finance six projects in the mainland. Benchmarks in Australia, Malaysia, Indonesia and Singapore also declined. Taiwan regained some lost ground after being off 3.51% on Monday, while stocks in Shanghai remained flat. Markets in South Korea were closed for a holiday.


[R]6:30AM European shares fell broadly across the region.[/R]
European markets fell by mid morning. The FTSE Eurofirst had shed 12.9 points or 1% to 1,305.91, while the German Dax declined 40.8 points or 1% to 5,580.83 and the French CAC 40 dropped 66.4 points or 1.4% to 4,849.68. The takeover struggle for BAA saw another turn as Goldman Sachs announced it was prepared to offer 955.25p after market talk prompted the UK airport operator had been up to a revised 950.25p takeover offer from Grupo Ferrovial of Spain. Both bids include the BAA dividend of 15.25p. Ryanair shed 1.9% after the budget airline announced it anticipated profits growth of 5 to 10% this year if oil prices stayed close to $70 a barrel. Axa, the French insurance company, said it had reached an agreement to sell its Axa Re business to Stone Point Capital, the US private equity group. Axa dropped 1.2%. Novartis reported that it would pay up to $507m in milestone payments to the US biopharmaceuticals company Human Genome Sciences to acquire rights to Albuferon, a treatment being developed for chronic hepatitis C infections. Novartis declined 0.5%.

Light, sweet crude oil for July delivery dropped 20 cents to $72.40 a barrel and July Brent crude on London''s ICE Futures exchange declined 29 cents to $71.08 per barrel. Gold traded at $633.50 an ounce on Tuesday, down $10 an ounce from Monday''s close of $643.50. The dollar gained against the other major currencies. The euro dropped to $1.2906 from $1.2909, after it rose on Monday to its highest level since May 15. The greenback advanced to buy 112.39 Japanese yen from 112.16 the day before, while the British pound fell to $1.8720 from 1.8724 in New York.