Ferrovial puts 10% of BAA up for sale

BAA is set to find out whether years of criticism from regulators, politicians and passengers has dented investors' confidence in the business after the airport group's Spanish majority shareholder put a 10% stake up for sale today. Ferrovial, one of Spain's most powerful conglomerates, said it planned to hive off a minority shareholding in the Britain's largest airport owner, whose assets include Heathrow, Stansted, Glasgow and Edinburgh airports. Ferrovial led a consortium that acquired BAA for €16bn (£14.2bn) in 2006 in one of the most keenly contested – and highly leveraged – takeover battles of that year. The deal, which saw Ferrovial emerge as a 55.9% shareholder in BAA, loaded the airport group with debts of £12bn that were also consolidated on Ferrovial's balance sheet. According to analysts, Ferrovial would be able to remove BAA debt from its books if it reduced its stake below 50%. Ferrovial, which also has substantial interests in construction and toll roads, owes €24.2bn, of which €15bn is accounted by BAA. However, it is understood that the primary reason for the move is frustration at a perceived undervaluation of BAA in Ferrovial's share price. Iñigo Meirás, Ferrovial's chief executive and former head of the group's airport business, said the stake sale was part of the Spanish conglomerate's strategy of putting fresh valuations on its assets: "The process that we have initiated is in line with our strategy to establish a market valuation of our assets. Heathrow is one of the best infrastructure assets in the world and its resilience has been proven by its performance in the current economic circumstances." Dismissing the notion that Ferrovial will exit its most high-profile asset, Meirás added: "We would like to underline that our commitment as a long-term investor in BAA remains in place." BAA and its Spanish owners were heavily criticised shortly after the business was sold when, in August 2006, Heathrow failed to cope in the wake of a drastic tightening of security restrictions after police foiled an airline bomb plot. However, chief executive Colin Matthews has presided over an overhaul of operations and the airport's reputation for "Heathrow hassle" has diminished in recent years.