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Goldman Sachs' BAA Bid Falls Through Amid Bidding War

Strategic Insights

— 1 min read

Goldman Sachs' mergers team made a valiant effort to defend BAA against Ferrovial's rival bid, but ultimately, the Spanish infrastructure group emerged victorious. The battle for the world's largest airports operator saw key players like Citigroup and the Ontario Teachers' Fund vying for control, with Goldman Sachs leading a consortium that included AIG, Borealis, Colonial First State, and Abu Dhabi's Mubadala. Despite a strong 960p-per-share cash offer, the Goldman consortium was unable to stem the tide of Ferrovial's stake building, ultimately leading to the collapse of the bid.

Key Takeaways:

  • The Goldman Sachs' consortium, led by Simon Dingemans, offered 960p per share in cash, which was a 10p per share premium to Ferrovial's offer.
  • Citigroup, acting as Ferrovial's adviser, launched a dawn raid on BAA's shares, buying nearly 14% and eventually securing a total stake of 28.7% by 9am.
  • Goldman's attempt to block Ferrovial's stake building was too late, and the market responded swiftly, with Citigroup securing the necessary shares to nix the Goldman bid.
  • The battle for BAA was a four-month-long saga, with various players vying for control, including Goldman, Ferrovial, and the Ontario Teachers' Fund.
  • Despite being outbid, Goldman's interest in BAA began in November 2006, when it teamed up with Ferrovial, the Ontario Teachers' Fund, and Borealis to make a joint bid.

Statistics:

  • 960p: Goldman's per-share cash offer
  • 950 1/4p: Ferrovial's rival bid per share
  • 28.7%: Citigroup's total stake in BAA after the deal flow
  • 140m: Shares Citigroup picked up by 9am
  • 12.9%: Stake Citigroup secured at 9am
  • 4 months: Length of the battle for BAA
  • 14%: Stake Citigroup had bought for Ferrovial on Tuesday
  • 8-9%: Additional stake Citigroup acquired in the morning
  • 20 minutes: Time it took for Citigroup to secure the necessary shares

Sources:

  • The Financial Times, "Bidding war for BAA ends with Citigroup securing 28.7% stake"
  • Bloomberg, "Goldman Sachs Says BAA Bid Talks Ceased"

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