8th February 2006
Possible takeover bid for BAA
SSE has issued the following statement in response to the news that Spanish company Ferrovial is considering a possible takeover bid for BAA plc:
BAA has made few friends in the local community as a result of the unethical way it has behaved over the past two years and SSE wholeheartedly welcomes the news of a possible takeover bid for the company.
BAA has brought this upon itself by regarding its role as being to deliver the Government’s airport policy objectives as opposed to maximising shareholder value. The classic example is the recent announcement of plans to invest £3 billion at Stansted, despite the fact that Stansted is still sitting with accumulated losses from the last major investment 15 years ago and still only earning a 4% return on its assets.
Nobody pays a premium to take over another company unless they are confident that they can add significant value by running the business differently. In the case of BAA, its massive future investment plans are the key issue, particularly at Stansted, where it intends to put good money after bad by building a second runway. This is its Achilles heel. Any new owner, perhaps especially an overseas owner, would take a far more hard-headed commercial view of this and would be less inclined to do the UK Government’s bidding. Whether or not a bid materialises – and if so whether or not it succeeds – a second Stansted runway has became an even more difficult proposition as a result of today’s announcement.
BAA no longer has the Government’s ‘golden share’ to protect it from an unwanted bid, this having been abolished in 2004, following a ruling by the European Court of Justice.