GIP Buys Gatwick Airport

Airport operator BAA has agreed to sell London/Gatwick to a group controlled by Global Infrastructure Partners (GIP), the majority owner (75%) of London City Airport.  The £1.51 billion purchase fee (£55 million of which is conditional on future traffic performance and the buyer’s future capital structure) is significantly less than the original asking price.  The sale remains subject to European Union merger regulation clearance and is due to be completed by the end of 2009.
BAA, owned by Spanish construction company Ferrovial, has confirmed that the proceeds will be primarily used to clear part of its debts, which stood at £9.6 billion in June 2009.  Michael McGhee, the GIP partner leading the acquisition, said that Gatwick’s new owner would “upgrade and modernise” the airport “to transform the experience for both business and leisure passengers”.
The Competition Commission ordered BAA to sell Gatwick, plus London/Stansted and either Glasgow or Edinburgh Airports, in March 2009, following an investigation into lack of competition.  BAA has appealed against this decision ‑ apart from Gatwick, which it had already announced it planned to sell.  BAA is arguing that the ruling was influenced by a connection one of the ruling panel members is alleged to have had with a group interested in purchasing the airports.  The company is also concerned that the Commission did not take into account the difficulty in selling airports in the middle of a global recession.
Commenting on the sale, BAA’s CEO Colin Matthews said: “BAA is changing and today’s announcement marks a new beginning for both Gatwick and BAA.  We wish Gatwick well for the future and are confident that the airport will flourish under new ownership.”  BAA is now concentrating most of its efforts on major improvements to Heathrow.  The company experienced tough trading conditions during 2009, with annual profits down by 18.4% to £582 million.