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Desmond gets trickle down from BAA bid scenario



LONDON City Airport owner Dermot Desmond is likely to be keeping a close eye on the takeover talk surrounding BAA. Shares in BAA, which owns Heathrow, Gatwick and Stansted, have increased by almost 30% over the past two months as Spanish company Grupo Ferrovial prepares a £9bn bid.

Ferrovial is planning a cash bid for BAA and may, according to British media reports, team up with Australian bank Macquarie, which recently lost out in its attempt to acquire the London Stock Exchange.

Desmond's London City Airport is an absolute tiddler compared to BAA's trio of assets in the British capital, but any revised valuation applied to BAA in a takeover battle should still trickle down.

Desmond bought London City for just £23m in 1995, and some view the purchase as one of the Kaiser's shrewdest. London City is currently undergoing a £40m expansion that should allow the facility to handle about 3.5m passengers per year by 2010.

That the Docklands Light Railway now delivers travellers direct to the airport can't but have helped boost its value. And, with the Olympics set to give the whole docklands area a big lift, the meter on this Desmond investment is still running.




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