NZ's Morrison joins bids for Stansted airport-sources

LONDON Mon Oct 29, 2012 2:47pm EDT

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LONDON (Reuters) - New Zealand investment manager Morrison & Co has entered the race for Britain's Stansted airport, people familiar with the situation said, which has been put on the block by Ferrovial, the operator of Europe's biggest airport Heathrow.

Other bidders include Manchester Airports Group (MAG), which is in a partnership with Australia's Industry Funds Management (IFM), Macquarie's infrastructure fund and private-equity firm TPG, the people said.

Morrison is putting together a consortium including New Zealand funds Infratil, the owner of Glasgow Prestwick airport as well as New Zealand Superannuation Fund, one of the people said.

Ferrovial (FER.MC) is expected to close a deal in the first quarter of 2013 as bidders would need time to study Stansted's accounts and fund a deal estimated around 1 billion pounds, the people said.

MAG is seen as the frontrunner given its sector expertise and financial firepower due to its partnership with IFM, which took a 35 percent stake the operator earlier this year.

"The problem (for Ferrovial) will be to have a solid second bidder to compete with MAG," said a financial source familiar with the sector but not involved in the deal.

Stansted, a predominantly leisure and holiday airport 50 km north east of London, flew 17.4 million passengers last year.

It was put up for sale in August after Ferrovial was forced by Britain's competition regulator to sell off assets and loosen its grip on the UK market.

MAG and IFM hired JP Morgan (JPM.N) and Gleacher Shacklock to advise on a bid while TPG is working with UBS, the people said. ING (ING.AS) and Deutsche Bank (DBKGn.DE) are advising BAA.

Heathrow, MAG, Morrison, Macquarie and TPG declined to comment.

RYANAIR RISK

Low-cost Irish carrier Ryanair accounts for about 70 percent of the traffic at Stansted where the airline's combative approach to pricing is expected to drag down the deal's value well below other recently sold airports such as Gatwick and Edinburgh.

Stansted was estimated to be worth about 1.3 billion pounds based on regulatory calculations but Ferrovial would likely have to take at least a 10 percent discount, the people said.

Earlier this month, Ryanair was excluded from taking part in the sale.

"It is all in Ryanair's interest to get the lowest possible price for the deal so that the new owner would have more manoeuvring room to keep fees down", said a person familiar with the situation.

The ongoing regulatory crackdown has been a major headache for Ferrovial.

When it bought BAA, the British airport operator recently renamed Heathrow Ltd, for 10.3 billion pounds in a highly-leveraged deal in 2006, Ferrovial planned to keep all of its airports and make them more efficient by outsourcing services.

Instead, it has been forced to sell assets at a time when valuations are lower than when it bought the business.

The battle for Stansted was expected to draw U.S. banks, pension funds and Asian operators.

Hong Kong billionaire Li Ka-shing's Cheung Kong Holdings vehicle was also thought to have been interested via a bid for a stake in MAG that it lost out to IFM.

($1 = 0.6241 British pounds)

(Reporting by Sophie Sassard and Anjuli Davies in London; Editing by Douwe Miedema and David Cowell)

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