UK. Airport Development and Investment Ltd (ADI), the Ferrovial-led consortium set to acquire BAA, has said the UK airports group is a long-term investment. It also said that it had no intention of splitting up the group’s UK airports.
The BAA Board this morning recommended shareholders to accept ADI’s offer valuing BAA at 950.25 pence per share. Also this morning, ADI confirmed that it has purchased 150 million shares in BAA at 950.25 pence per
share cum dividend, representing approximately 13.9% of BAA’s issued ordinary share capital.
BAA Chairman Marcus Agius said: “BAA is a great company and during the past few weeks we have made every effort to ensure that its true value is properly recognised. The offer represents a premium of more than 49% to the 30 day average pre-bid share price and, accordingly, the BAA Board is recommending that shareholders accept the offer.”
Ferrovial Chairman Rafael del Pino said: “We are delighted to have reached an amicable agreement with BAA. We believe this Offer represents outstanding value for shareholders and, with the proposed partial share alternative option, investors can continue to participate in the long term future of this business. We are committed to cooperating with current management and providing on-going investment in infrastructure with the ultimate aim of achieving value-enhanced quality services for our stakeholders and customers.”
The partial share alternative gives existing shareholders the option of taking part indirectly in BAA going forward. Shareholders can buy into a newly formed company, Altitude Assets, which will be listed on the AIM market of the London Stock Exchange. Altitude Assets will hold a 5-10% stake in the holding company of ADI, ADI Holdings. BAA shareholders who elect to take part will receive 897.4 pence in cash per BAA Share plus 0.2 Altitude shares instead of 935 pence in cash.
On its plans for BAA, ADI said: “ADI is committed to the long-term ownership and continued development of BAA’s business, and to its investment needs in the future.
“ADI plans to keep together and to focus on BAA’s UK airports. It will undertake a thorough review of BAA’s other assets when it has access to detailed information about them following completion of the Recommended Final Offers, with a view to determining whether to keep or sell these assets. ADI is willing to make such commitments in relation to BAA’s Australian airport interests as will ensure compliance with the Australian Airports Act. The proceeds of any sale of BAA’s non UK airport assets will primarily be used to repay acquisition debt.”
It added: “ADI believes that there are a number of possible ways to improve BAA’s business which could deliver significant benefits to users in the medium to long-term. For example, ADI will look at reducing overheads, outsourcing certain functions where appropriate and improving procurement practices. ADI believes this would introduce both a higher degree of flexibility in the operations and best industry practices, resulting in higher service levels overall. Ferrovial’s global experience of operating successful airports and infrastructure projects has helped ADI to identify these opportunities and is expected to assist it in implementing changes going forward.”
The consortium said it recognized the need for investment at BAA’s UK airports. “To assist in this process, ADI has arranged a £2.0 billion capital expenditure facility which is capable of being drawn for a five-year period. Should this funding source be fully utilised, ADI is confident it will be able to raise additional capital expenditure facilities to assist in funding further investment.”
As announced on 29 March 2006, Ferrovial Infra has entered into an agreement with Macquarie Airports (Map) in relation to conditional put and call options over Ferrovial’s interests in Sydney and Bristol airports. Assuming ADI acquires shares carrying over 50% of the voting rights of BAA’s share capital, Map has the option to acquire Ferrovial’s 20.9% interest in Sydney airport for approximately £412 million and the price at which MAp may acquire Ferrovial’s 50% interest in Bristol airport is approximately £106 million.
MORE STORIES ON BAA AND FERROVIAL
BAA supports Ferrovial takeover; but Goldman Sachs remains in the running – 06/06/06
Breaking news: BAA confirms it is in discussions with Ferrovial and rival party – 05/06/06
Ferrovial increases BAA offer to 900 pence; BAA rejects approach once more – 30/05/06
“˜Stay with BAA’ urges UK airports company as it unveils defence against Ferrovial takeover – 03/05/06
