updated 3/17/2006 1:24:05 PM ET 2006-03-17T18:24:05

British airports operator BAA PLC said Friday it had received and rejected an 8.75 billion pound ($15.35 billion) takeover proposal from Spanish infrastructure company Grupo Ferrovial SA.

BAA, which operates seven airports across Britain, including Heathrow, Gatwick and Stansted in London, said that proposed offer of 810 pence ($14.20) per share did not reflect the true value of its assets.

“On the basis of this proposal, the board does not believe it is in shareholders’ interests for it to enter into discussions with Ferrovial,” BAA said in a statement to the London Stock Exchange.

Ferrovial said it was “disappointed that BAA has chosen to reject the proposal without further discussion.”

Ferrovial, which made the approach as part of a consortium also comprising Canadian investment fund Caisse de depot et placement du Quebec and Singaporean government fund GIC Special Investments Pte. Ltd., said its “strong preference” was to receive a recommendation from BAA, rather than move to a hostile bid.

“Therefore, the consortium would be willing to increase its offer by a small increment in return for BAA agreeing to grant the limited due diligence access ... and recommending the consortium’s offer,” it said.

The offer is a 25 percent premium over BAA’s price when Ferrovial announced on Feb. 8 that it was considering a bid.

BAA’s shares fell 1.25 percent to close at 828.5 pence ($14.54) on the London Stock Exchange.

Analysts said BAA’s rejection was unsurprising given reports that others, including Australia’s Macquarie Bank Ltd., are also interested in the airports operator.

Ferrovial, which owns construction company Amey, said that the consortium was “committed to the long-term ownership and continued development of BAA’s business.”

It said the group would focus on investment in Britain and enhancing airport capacity in southeast England. BAA is already building a fifth terminal with British Airways PLC at Heathrow Airport and a second runway at Stansted to cope with extra demand.

Grupo Ferrovial said it will receive financing to cover BAA’s current debt of 5.25 billion pound ($9.21 billion) and has taken into account BAA’s planned expenditure of 6.8 billion pounds ($11.93 billion) on projects including the Heathrow and Stansted expansions.

Britain’s airspace regulator warned last month that any potential bidder should take into account the expected infrastructure spending required to meet the expected rise in passenger traffic across Britain.

The Civil Aviation Authority, which is carrying out a review of caps on airport charges at BAA’s three London airports, indicated it was not prepared to raise caps on airport charges so that any bidder could generate enough cash to pay back loans taken out during a takeover.

Ferrovial said Friday it has been advised that any formal bid would not be met with any material regulatory hurdles.

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