Watch that asset price drop!
BAA has (finally) agreed the sale of London Gatwick. The airport goes to Global Infrastructure Partners, the owners of London City, for £1.51bn.
It’s a decent price for GIP considering that Gatwick’s regulatory asset base (RAB), upon which the fees the airport is allowed to levy are based, is £1.6bn. What’s more, according to BAA’s statement, £55m of the sale price is conditional on future traffic at the airport and the buyer’s capital structure.
A bargain for Global Infrastructure then, but quite a comedown for BAA, which was rumoured to be expecting £2-3bn for the airport as late as last September.
In fact, the (downward) development of BAA’s rumoured price expectations has been quite dramatic:
Ferrovial, BAA’s Spanish parent, will be use the proceeds from the sale to pay down its rather staggering amount of debt, so the price of the airport is no small matter.
Small wonder, then, that BAA is so vociferously appealing against the UK’s Competition’s Commission’s decision to force the company to break itself up.
As a reminder, BAA announced its intention to sell Gatwick last September — heading off an official decision from the Competition Commission. That decision, nevertheless came in March, with an order for BAA to sell Gatwick, London Stansted and one of its Scottish airports.
BAA, incidentally, was (sort of) being offered £2bn for Stansted as of August 2008 (albeit from the uber-flippant Ryanair CEO Michael O’Leary).
We wonder what they’d be getting now.
Related links:
A- BBB BAA – FT Alphaville
London Gatwick, the saga continues – FT Alphaville
Breaking up BAA: What price an airport? – FT Alphaville
(Another) deal of the day: London Gatwick – FT Alphaville