Major shareholders in UK airports group BAA said yesterday that they would not support Grupo Ferrovial's £8.8 billion (€12.7 billion) bid for BAA ahead of meetings with the Spanish firm this week.
Scottish Widows Investment Partnership and Standard Life Investments said that they would not back the cash bid of 810 pence per share, and that they expected more.
Shares in BAA, which owns London's Heathrow, Gatwick and Stansted airports, were up 1.3 per cent at 839 pence yesterday afternoon after slipping on Friday, when BAA said that it had rejected the bid.
Sources familiar with the situation said that Ferrovial chairman Rafael del Pino planned to lobby major BAA shareholders personally this week before deciding whether to take the bid hostile or walk away.
Standard Life Investments said that bids could go as high as £10 a share if rival bids emerged. Analysts had expected bids of 850p to 900p.
"Some commentators have mentioned £8.50 a share and £9 a share. I think in a competitive auction - and I think that's what we'll get - you can go way, way beyond that in terms of valuing BAA," said Euan Stirling, investment director at Standard Life Investments.
Standard Life owns 1.4 per cent of BAA stock.
Scottish Widows, which owns 3.4 per cent, said in a statement it supported BAA's rejection of the Ferrovial bid.
Other sources familiar with the situation said that Australia's Macquarie Bank was still looking at a possible bid, but said that it did not plan to make an approach this week.
Ferrovial said on Friday that it would be willing to bid higher if BAA's board allowed it to conduct limited due diligence and recommended a friendly takeover.
Ferrovial's consortium included an investment company directed by GIC Special Investments Pte Ltd and Canadian fund manager Caisse de Depot et Placement du Quebec.
Ferrovial had said in early February it was considering a cash bid for BAA as part of a consortium, sending BAA stock soaring.
Ferrovial 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.
It was working with Spanish bank Santander, Royal Bank of Scotland and Citigroup on the deal. - (Reuters)
