UK to give up BAA 'golden share'

Heathrow could face a hostile bid

The UK government has told £5bn airports operator BAA it is ready to ditch its "golden share" in the company - opening it up to potential takeover bids.

The golden share was ruled illegal earlier this year by the European Court of Justice.

But ministers have indicated they are not going to appeal against the ruling.

BAA owns Heathrow, Gatwick and Stansted and is the world's biggest publicly owned airport operator.

Takeover 'unlikely'

The golden share is a device used by governments to prevent unwanted takeover bids for former nationalised companies.

The UK government's holding in BAA originated 16 years ago when it was privatised.

BAA has said it has received special notice from the government that it wishes to redeem its special 15% stake at the nominal value of £1.

Although the removal of the golden share puts BAA into play as a takeover target, City analysts believe such a scenario is unlikely.

Removing limit

Transport analyst Dominic Edridge at Commerzbank said: "Nothing is going to happen.

"There is no one out there who is even vaguely going to look at them, particularly at this time."

Following the announcement, BAA said it would seek the removal of the 15% limitation of shareholdings at its next annual meeting in 2004, or earlier if appropriate.

The government is expected to retain an element of control over BAA, as it controls the granting of planning permission for airport expansions.

BAA also owns Glasgow, Aberdeen Edinburgh and Southampton airports.

BAA shares closed down 1.5p at 480.25p.