Mergers, Acquisitions and Takeovers Case Study

Ferrovial’s Acquisition of BAA: High Profile British Assets Changes Hand

OR

Abstract:
BAA Plc, (formerly British Airports Authority) the world's largest commercial operator of airports, agreed a sweetened offer of US $19.3 billion (£10.3billion) takeover bid from Spanish construction giant Ferrovial on Monday, 5th June, 2006. BAA, which had rebuffed Ferrovial’s earlier offer of 810 pence (US $15.16) per share, which had a worth of US $16.38 billion (£ 8.78 billion) four months ago (in February, 2006), then agreed to the revised offer of 950.25 pence (US $ 17.79) per share. US’s investment bank Goldman Sachs Inc. the major rival of the bid however urged BAA shareholder for not taking any hasty decisions as they offered 955.25 pence (US $ 17.86), which was more than the Ferrovial’s offer. BAA’s management said that Ferrovial’s bid had better strategic rationale, compare to Goldman Sach’s. BAA’s board opted for Ferrovial because its bid was more advanced in terms of regulatory clearances and also it would allow BAA’s shareholder to opt for shares instead of cash. Madrid based Ferrovial which diversified from infrastructure services to offset cyclical construction operations, BAA takeover bid by far was the strongest move for them. This case discusses about the acquisition strategy of Ferrovial and it’s impact on British Aviation industry.

Pedagogical Objectives:

• To understand the commercial airport operation Industry
• To discuss the rationale of diversification beyond the core business.

Keywords : Mergers,Acquisitions,Alliances Case Study;BAA Plc (formally known as British Airport Authority); Ferrovial; Goldman Sachs; Heathrow; Acquisition; Takeover; Aviation; Construction; Controversy; Strategic initiative; Sweetened offer; Airport Development and Investment Limited (ADI); Madrid; Civial Aviation Authority (CAA); Office of Fair Trading

Contents : 
Introduction
Company Background
Ferrovial’s Initiative
Controversies And Apprehension
Future Of The Deal
Company Information
Airports Owned By Baa
12-Year Series Of Financial Information
The Growth Of Aviation Industry Of Uk