Spanish construction group Ferrovial launched its takeover bid for British airport operator BAA on Friday, but kept its price at 810 pence (USD$14.14) a share despite hopes of a higher offer.
BAA, which owns Heathrow, Gatwick and Stansted airports, rejected the cash offer from Ferrovial's bidding consortium, which was pitched at the same level as a non-binding proposal turned down by BAA last month.
"(It is) the same price that the board has already emphatically rejected as not beginning to reflect the true value of BAA's unique portfolio of strategic airport assets," BAA said in a statement.
"We fully support the board's (BAA's) rejection of the cash offer at 810 pence from Grupo Ferrovial," Robert Waugh, head of UK equities at Scottish Widows Investment Partnership (SWIP), said in a statement. SWIP owns about 3.4 percent of BAA.
F&C Asset Management, which owns about 1.75 percent of BAA, also said 810p-a-share was too low.
Ferrovial is bidding with Caisse de Depot et Placement du Quebec and Singapore's GIC Special Investments and is advised by Australia's Macquarie Bank, to whom it will sell stakes in Sydney and Bristol airports if the bid goes through.
Ferrovial said that if it bought BAA it intended to focus on Britain and boost capacity, particularly in southeast England.
The country's aviation regulator, the Civil Aviation Authority, reiterated on Friday that bidders for BAA should plan for major upgrades to airport facilities when arranging their financing.
European airports have been drawing investors attracted by a highly visible, long-term outlook which predicts traffic in Europe will double by 2020 to 2 billion passengers. BAA fought off Germany's Hochtief in December to buy control of Hungary's Budapest Airport from the state for USD$2.2 billion.
Market players said Ferrovial's bid could be an opening shot.
"This looks like a marker to me," said Paul Mumford, a fund manager at Cavendish Asset Management. "It will flush out any counter-bidders and also force BAA to come out and explain why they're worth more than 810p".
BAA shares have surged about 30 percent since Ferrovial revealed its interest in early February. Some analysts think a successful bid will have to be pitched around 900p a share.
Ferrovial, which had until April 24 to announce a firm bid or walk away, said it was keen to talk to BAA to seek a recommended deal.
"Whilst this bid is being made unilaterally, we do not regard it as hostile," Ferrovial Chairman Rafael del Pino said in a statement.
The Spanish group 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.
Ferrovial said it had raised debt financing for its bid from Citigroup, Royal Bank of Scotland, Santander, HSBC and Calyon.
