BAA, facing a potential hostile takeover as well as a possible government inquiry into whether its control of seven UK airports creates a fair market for airlines and passengers (ATWOnline, May 26), is pushing back and warning shareholders that Ferrovial Group's ?8.75 billion ($16.41 billion) bid greatly undervalues the company.The Spanish firm, meanwhile, said it will cooperate fully with any probe into BAA's alleged "monopoly" status should it successfully acquire the airport operator.

BAA Chairman Marcus Agius said last week that Ferrovial's bid "has failed to offer BAA shareholders anything which approaches the true value" of the company that controls London Heathrow, Gatwick and Stansted airports. On a per share basis, Ferrovial's bid is valued at 810 pence. But BAA claims its value is "clearly higher than 940 pence per share" and said in a statement that "any bidder should expect to have to pay a premium to secure control of a company, particularly one which is the world's leading and largest airport company."

The board of BAA said its "confidence in the future prospects of the business" allows it to offer shareholders a 40% dividend per share increase in 2006-07 and a ?750 million capital return if the Ferrovial bid is rejected. BAA added that shareholders wishing to reject Ferrovial's bid "need do nothing and should not sign any document" sent by the Spanish firm or its partners in the hostile takeover bid.

"We remain determined that this company will not be sold to the Ferrovial Consortium or any other bidder on the cheap," insisted Agius. CEO Mike Clasper added that BAA's value is "very clear" and that shareholders "should stay with BAA."

Ferrovial said it would soon respond to BAA's claim that its bid undervalues the company. Under UK regulations, any changes to the bid must be made no later than June 5.