UPDATE 1-Stansted airport attracts three $1.6 bln bids-sources

Wed Jan 16, 2013 8:20am EST

By Anjuli Davies and Sophie Sassard

LONDON Jan 16 (Reuters) - London's Stansted airport has attracted three final bids each worth about 1 billion pounds ($1.6 billion), three sources close to the matter said.

A deal would give its new owner access to Britain's fourth largest airport, which flew 17.4 million passengers last year.

A predominantly leisure and holiday airport 50 km north east of London, it was put up for sale in August after Ferrovial-controlled BAA was forced by Britain's competition regulator to sell off assets and loosen its grip on the UK market.

Australia's Macquarie, Malaysia Airports Holdings and Manchester Airports Group (MAG) with its Australian partner IFM are the final bidders, the people said.

"We are hopeful we'll have a deal next week", said one of the people who didn't want to be named because the talks are private.

Private equity firm TPG and New Zealand investment manager Morrison & Co were previously interested in Stansted but did not submit bids.

Stansted was not seen as an easy deal to sell because low-cost Irish carrier Ryanair accounts for about 70 percent of the airport's traffic. 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.

"It's a miracle they got three bids", said one of the people.

"It's indicative of how difficult it is to invest in quality assets at the moment. The ryanair risk is not for the fainthearted".

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.

Macquarie, which owns Sydney's airport, also has expertise in buying airports, and Malaysia Airports has the financial firepower, a sector banker said.

"It's all down to who will put the highest bid", the banker said.

This banker did not expect Stansted to fetch similar multiples to Edinburgh Airport and Portugal's ANA, which were recently sold 16 times and 15 times earnings before interest, taxes, depreciation and amortisation (EBITDA).

However, some analysts say Stansted could fetch up to 1.3 billion pounds ($2.04 billion).

RBC Capital analyst Olivia Peters says Stansted could be sold for 95 percent of its regulated asset base (RAB) - around 1.28 billion pounds, or around 14.2 times its annual earnings before interest, taxes, depreciation and amortisation (EBITDA).

Stansted's owner Heathrow Airport Holdings, Macquarie and MAG declined to comment while Malaysia Airports could not be reached outside of office hours.

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