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BAA loses fight against Stansted sale

by Laura Board in London | Published February 1, 2012 at 10:25 AM

The U.K.'s BAA Airports Ltd. on Wednesday, Feb. 1, lost the latest and possibly final round of a nearly three year old legal dispute with antitrust regulators as the Competition Appeal Tribunal rejected its challenge to the enforced selloff of Stansted airport.

BAA, the owner of Heathrow, the U.K.'s largest airport, said it was "disappointed" by the decision and would consider it carefully before making further statements. The Competition Commission welcomed the ruling and said it would ensure that BAA sells the airport, located to the northeast of London, after it disposes of Edinburgh airport.

"We are very pleased that our decision has been upheld. Whilst BAA is of course entitled to explore the available avenues for challenge, it is now surely time for BAA to accept our findings and proceed with the necessary divestments," said Laura Carstensen, who chairs the BAA Remedies Implementation Group within the Competition Commission.

The dispute dates back to March 2009, when the Competition Commission ordered BAA to sell Stansted and either Glasgow or Edinburgh, as well as Gatwick, to the south of London, which BAA had already put up for sale.

Last July, after a series of appeals, counter-appeals and a new review of the case, the regulator reiterated that BAA should sell two additional airports as well as Gatwick, starting with Stansted. The regulator changed the disposals schedule in October, allowing BAA to sell Edinburgh first, after the company challenged the Stansted selloff at the Competition Appeal Tribunal.

BAA, which is led by CEO Colin Matthews, has said it wants to agree on the sale of Edinburgh by summer 2012. The auction, conducted by BNP Paribas SA and Citigroup Inc., may attract bids from a Carlyle Group LP consortium; 3i Group plc, working with Universities Superannuation Scheme and fund manager M&G Ltd.; Macquarie Group Ltd.; and Global Infrastructure Partners, according to Dow Jones.

Global Infrastructure, of New York, in late 2009 bought the far larger Gatwick from BAA for £1.51 billion ($2.4 billion). Edinburgh may fetch up to £600 million, analysts have estimated.

BAA is an affiliate of Ferrovial SA, of Madrid, which in October ceded majority control of the airports operator by agreeing to sell a 5.9% stake in the holding company for BAA to Alinda Capital Partners LLC for £280 million. The sale took Ferrovial's stake down to just under 50% and allowed it to deconsolidate the U.K. company's roughly £10.6 billion of debt from its own balance sheet.

Ferrovial led a consortium buying BAA in 2006 for £10.1 billion after a bid battle conducted at the height of the bull market.

The Competition Appeal Tribunal heard BAA's appeal against the disposal of Stansted in early December.

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