13.11.05
BAA, the UK's airports operator, will table a E1.6bn ($1.9bn, £700m)-plus bid for Budapest airport this Monday.
The British group's prospects of winning control of the Hungarian hub have been enhanced by the withdrawal of Australia's Macquarie from the competition 10 days ago. The Hungarian government is expected to announce a winner by mid-December. BAA is up against two German companies for state-owned Budapest - Fraport, the quoted airports group bidding in tandem with Deutsche Bank, and construction group Hochtief.
The Hungarian government is offering a 75% stake in Budapest airport and a 75-year operating lease. The airport is growing fast and is regarded as having "bags of potential", partly because Hungary has just joined the EU. "It ticks lots of boxes," one observer said.
The price could well exceed the E1.6bn mark set in an earlier, abortive bidding round, transport bankers believe. BAA is keen on the asset, The Business has learnt, but cannot be seen to overpay.
A bid of E1.6bn - understood to be the price offered in the last round of bidding by Hochtief - would value the airport at 20 times earnings, a record for a European hub. The value of the Budapest bid is likely to set a new yardstick for the valuation of European airports, which have attracted ever-higher prices in a wave of privatisations and floats in recent years.
The Budapest competition is being keenly watched because BAA has a mixed record of investment outside the UK and is juggling a large investment programme at its British airports. These include a fifth terminal at Heathrow and plans for a third runway at Stansted. Last week, it announced a revamp of Heathrow's terminal two to create a Heathrow East.
A previous round of bidding was abandoned after transport unions in Hungary complained they had not been properly consulted on the sale. This time, consultation with the unions is likely to mean an announcement will come in weeks rather than days.
