GIP out of Gatwick race(4)

Manchester Airports Group and Borealis are now in pole position to acquire Gatwick Airport after BAA rejects GIP’s £1.35 billion bid. The elimination comes less than a week after Citigroup's Lysander group was dropped from contention.

Global Infrastructure Partners (GIP) has been eliminated from the bidding for Gatwick Airport, leaving a sole consortium in a position to acquire the airport.

A source close to the deal told Infrastructure Investor that GIP’s fully-funded bid had been rejected by the Ferrovial-owned airport operator. This leaves the consortium comprising the Manchester Airports Group and Borealis the only remaining contender in the auction. Both BAA and GIP declined to comment on the matter.

Gatwick Airport

The GIP bid is thought to have been in the region of £1.35 billion (€1.53 billion; $2 billion)  to £1.4 billion, with the Manchester/ Borealis team also understood to have put forward an offer of around £1.4 billion. Both fall short of Gatwick’s Regulated Asset Base of £1.58 billion. Last week the Citigroup-led Lysander Investment Group was eliminated from the proceedings after submitting a bid which BAA described as undervalued and uncompetitive.

The Gatwick sale should now proceed relatively quickly, with BAA understood to have a desire to get the West Sussex airport off its books by the end of June.

Yesterday BAA confirmed it is appealing against the Competition Commission’s report which recommended that it sell Gatwick, Stansted and either Glasgow or Edinburgh airports. BAA said its appeal is based on the fact that one member of the commission’s panel is apparently linked to an organisation interested in acquiring the airports that BAA is required to sell. It also said the commission’s report failed to take into account the adverse financial impact of introducing competition in the current financial and economic circumstances.

However, analysts believe the appeal doesn’t change a great deal and is merely an attempt to buy some time and wait for the market for infrastructure assets to pick up.

BAA is being advised on the auction by HSBC and RBS. GIP is being advised by Credit Suisse and JP Morgan, while the Manchester Airports Group/ Borealis bid is being advised by Dresdner Kleinwort.