Spanish contractor looks to acquire British firm to increase capacity should BAA takeover go forward
Spanish construction giant Ferrovial is looking at UK construction firms to support its expansion plans as it considers bidding for airport operator BAA.
It has emerged that Ferrovial has been looking at UK contractors and had considered a takeover bid for Mowlem, which has since been snapped up by Carillion. Industry figures say that Ferrovial may want to buy a UK firm to increase its capacity to deliver BAA's projects.
One senior industry source, whose firm carries out works for BAA, said that Ferrovial has been looking for an increased presence in the UK.
The source said: "It was taking a close look at Mowlem but it was felt that it wasn't quite right as it had a large defence and education portfolio. I know that Ferrovial was hugely disappointed to lose out on the Peterborough hospital PFI deal to Multiplex. It is seeking a presence in the UK, and buying BAA would give it a huge foothold."
The source said Ferrovial could need extra resources if it proceeded with a bid as it would be taking on BAA's massive forward order book.
The source said: "It has a massive construction workload and Ferrovial would struggle to take that on from cold. It would have to rely on the supply chains and relationships that BAA has, but let's not be naive here, there would obviously be an impact and it would want its own people in there - be they internal or people from its existing relationships."
Another option would be to acquire a number of subcontractors in the specialist sector to build upon the acquisition of Amey.
Ferrovial was required by takeover panel rules to issue a statement to the stock exchange on Wednesday when news of its interest in BAA emerged. Shares in the airport operator rose almost 20%, or 125p, to 779p, causing its market capitalisation, and the asking price for a bid, to rise to £8.3bn.
A spokesperson for Ferrovial said that a takeover of BAA "would make sense for Ferrovial because it already has a nice portfolio of airports with Bristol, Belfast, Exeter and Sydney".
The firm said it did make an offer, it was likely that it would be as part of a consortium. The spokesperson said that Ferrovial had not yet formed a consortium but had entered discussions. He added that a tie-up with a financier or another corporate funder within the industry would make sense.
Brokers have tipped Australian bank McQuarrie to join the bidding, either with Ferrovial or separately.
The spokesperson said the issue of capacity would be decided by the make-up of the bidding consortium.
He said: "It will depend on how it is financed. It is not going to be Ferrovial alone and it will depend on how the consortium is made up."
BAA's forward order book includes: n £6.8bn investment at Heathrow, Gatwick and Stansted over 10 years
- £1.5bn Heathrow East scheme
- £700m on Terminal 1 upgrades
- £450m at Terminal 3
- £50m a year on maintenance at the seven UK airports.
Ferrovial at a glance
- Sectors (2006) Infrastructure, services, construction, property
- Turnover (2004) £5bn
- Operating profit (2004) £526m
- Market capitalisation (2006) £6.1bn
- Countries UK, Poland, Portugal, Ireland, Italy, Switzerland, USA, Canada, Australia, Chile
- Staff 70,000