A financial consortium headed by US investment bank Goldman Sachs yesterday conceded defeat in its attempt to scupper Spanish firm Ferrovial's £10.3 billion takeover of airports operator BAA.
Goldman Sachs said it would not proceed with an offer after discussions with the UK company's board came to an end, ruling out a hostile bid approach.
The withdrawal should give Spanish infrastructure company Ferrovial a clear run, after it secured the support of BAA for its takeover offer on Tuesday and took its stake in the company to 28.7 per cent.
Analysts said its move would have stopped the Goldman Sachs team or any other potential rivals from coming in with a hostile bid.
"If Ferrovial control more than 25 per cent there is no way for Goldman to ever get to 100 per cent. If this is the case, then it really is done and dusted because nobody can shift them," said Gerald Khoo at Oriel Securities.
Goldman - acting as part of a consortium - earlier raised hopes of a further twist in the takeover battle when it initially said that talks with BAA directors were continuing. But that was quashed 20 minutes later as BAA said talks with the Gold-man team had ceased.
Ferrovial then tightened its grip on the Heathrow and Gatwick owner by buying a further 12.9 per cent of the company to add to the 15.8 per cent already in its ownership.
Goldman also faced the hurdle of a £115.5 million break fee, which BAA would have to pay Ferrovial if it changed sides.
It was reported that Goldman had put pressure on the Takeover Panel to scrap the fee, as it said it was not in shareholders' best interests.
The fee is equivalent to 10p a share in a bid battle where Goldman's approach is already 5p a share higher than the offer on the table from Ferrovial. It is thought BAA sided with the Spanish team because its plans for the operator were more advanced.
The successful approach from the Ferrovial consortium, which includes Canada's Caisse de depot et placement du Quebec and Singapore's GIC Special Investments, came in at 935p a share - equivalent to £10.11 billion - but featured a pledge to include a final BAA dividend payment, taking the overall value of the offer to 950.25p, or £10.3 billion.
The Goldman Sachs-led c onsortium, which also included US insurer AIG, Canadian investment fund Borealis, Commonwealth Bank of Australia's Colonial First State, Abu Dhabi invest-ment firm Mubadala and Ontario Teachers Pension Fund, made an offer worth a total of 955.25p, including the dividend.
BAA also yesterday announced its traffic figures for May, which showed it handled 12.8 million passengers in the month, an increase of 3.6 per cent on a year earlier.
European scheduled traffic was up 6.6 per cent, while North American activity was 1.4 per cent higher and other long haul routes increased by a collective 11 per cent. Among the fastest-growing routes were flights to India and China, which grew 58 per cent and 49 per cent respectively, the company said.
Aberdeen airport saw the largest increase in usage, up 13.1 per cent and taking its annual total of passengers past the three million mark for the first time. Stansted was up 11.3 per cent to 2.1 million for the month, Heathrow recorded a gain of 1.4 per cent to 5.7 million and Gatwick was up 4.3 per cent to 2.9 million.
BAA shares closed down 7p at 928p.