Last updated: January 18, 2013 10:25 pm

Manchester airport wins Stansted auction

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Stansted Airport©Getty

The owners of Manchester Airport have agreed to buy Stansted, the UK’s fourth biggest airport by passenger numbers, for £1.5bn.

The purchase by Manchester Airports Group follows a decision last year by Heathrow Airport Holdings, formerly known as BAA, to no longer resist an order by competition regulators to sell Stansted.

It means that Stansted will be owned by a company whose leading shareholders are Greater Manchester’s 10 councils.

As a result of the deal, London’s three largest airports – Heathrow, Gatwick and Stansted – will all have different owners. Previously they were held by BAA, but the Competition Commission insisted on a break-up.

The three airports are expected to propose potentially contentious solutions to the capacity crunch in southeast England, as the government considers the vexed issue of where to build new runways.

Heathrow, the hub which is already operating at full capacity, is interested in increasing its runways from two to four.

But Gatwick has suggested that it and Stansted should each add a runway. It would mean that London could have three airports, each with two runways, competing for business.

Boris Johnson, London’s mayor and a strong opponent of new runways at Heathrow, has indicated support for expansion at Stansted as a possible new hub airport.

The sale of Stansted will leave Heathrow Airport Holdings with just Heathrow and a handful of smaller airports, including Glasgow.

The operator, whose largest shareholder is Ferrovial, the Spanish infrastructure group, had hoped to retain Stansted.

Stansted had been expected to sell for a discount to the £1.3bn that aviation regulators estimate its assets are worth. The sale price is 15.6 times 2012 earnings before interest, tax, depreciation and amortisation, and the deal is expected to be completed by the end of February.

Sir Richard Leese, leader of Manchester City Council, one of the MAG shareholders, said: “MAG is a key driver of jobs and growth in the north of England and the acquisition of Stansted will help us deliver maximum value for Manchester City Council and the other local authority shareholders.”

MAG worked with Australia’s Industry Funds Management in the deal to buy Stansted. It beat competition for the airport from several bidders including Australian infrastructure fund Macquarie and a consortium led by New Zealand investor Morrison & Co, which dropped out earlier in the process.

MAG owns Manchester, East Midlands and Bournemouth airports. Under the terms of their partnership deal, Industry Funds Management will buy 35.5 per cent of MAG’s equity and get half its voting rights.

Charlie Cornish, MAG chief executive, said: “We will use [our] expertise at Stansted to ensure that the airport can fulfil its potential as a high-quality alternative London access point for global air travellers. Stansted has scope to benefit from significant volume growth over the short, medium and long term.”

Deutsche Bank and ING advised Heathrow Airport Holdings on the sale. JPMorgan Chase advised MAG. Gleacher Shacklock advised Industry Funds Management.

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