"If the Spanish come storming ashore, it will be the most audacious foreign bid for a British company in history."
This is how one airline operator referred at the weekend to news that Ferrovial was considering a bid for airport operator BAA. Not surprisingly, the news has also set pulses racing in the British construction industry, which may have to watch as one of its most important clients is bought by a competitor that is also the 10th largest contractor in Europe.
BAA is not only one of the industry's biggest clients, it is also one of its most progressive, so any change in its ownership arouses many concerns and begs many questions. First of all, if BAA does fall into Spanish hands, what will happen to British airport work? Will it continue to be let through frameworks? Will Ferrovial buy a UK firm to provide construction services? Or, as rumour presently has it, is it planning to form a joint venture with Hochtief, the German company that is currently number four in the Euroleague? Then there is the question of company culture: what changes will be made in the way BAA designs and delivers its airport infrastructure? Would they preserve BAA's reputation as Britain's most forward-thinking client?
At this stage, little can be stated with certainty. Given the tight regulation that BAA is subject to, it's unlikely that Ferrovial would be allowed to curb existing investment plans - but nevertheless it would be under pressure to deliver higher dividends to shareholders. And even if BAA staves off a bid from Ferrovial or elsewhere, it will be difficult for it to return to the status quo ante: a successful defence will probably be based on a much more aggressive attitude to cost cutting and capital expenditure. Either way, it could be bad news for airport infrastructure procurement at Heathrow, Gatwick, Stansted, Glasgow, Edinburgh, Aberdeen and Southampton …
As for Ferrovial's intentions on the construction front, again, all we can do is speculate. Analysts in Spain are convinced that Ferrovial is transforming itself into a services provider, and its acquisition of support services consultant Owen Williams two weeks ago supports this view. It's not hard to suggest a reason for going into the services sector: the UK is littered with the bones of bullish foreign contractors who set themselves up as general construction companies, from Kvaerner and Ballast to Kajima and possibly even Multiplex. That said, not all foreign firms are in the position of being their own client, as Ferrovial would be if it bought BAA. And, of course, its purchase of Amey back in April 2003 has doubtlessly given it a better insight into how the market really works than a firm such as, say, Bouygues or Bilfinger Berger would have had.
Meanwhile, looking at the bigger picture, it looks as if Ferrovial's move is part of a larger trend for Spanish firms to enter the UK. For example, it now transpires that Ferrovial was in the running for Mowlem; and Spanish contractor FCC, which is only slightly smaller than Ferrovial, is bidding for a PFI hospital in Plymouth. Then there was all the talk recently of Acciona eyeing up Amec and, just this week, a bizarre rumour began spreading among Carillion staff that Santander Group, the Spanish bank that bought Abbey in 2004, was about to finance a bid for their employer.
Among all this uncertainty, though, one thing seems certain: the British honeypot is attracting ever more interest from European construction's great powers, and the Spanish contingent looks like one of the most formidable.