MAG Withdraw Gatwick Airport Bid

Manchester Airports Group (MAG) has pulled out of the race for London Gatwick after talks broke down over the valuation of the airport. It has been reported that MAG is refusing to increase its initial bid of £1.38 billion, which is currently some £100 million short of airport owner BAA’s valuation.

Critics have pointed to the bid rejection as a way for BAA to delay the sale to avoid selling the airport during a recession. The Competition Commission ordered BAA to sell Gatwick, Stansted and one of its Scottish airports earlier this year and has been given until 2012 to do so.

However, BAA is currently appealing against that decision and with a hearing due at the end of October, will hope to have the decision overturned. Should the appeal fail, MAG believe Gatwick's value may be much lower next year if passenger numbers continue to fall.

The MAG consortium, which also includes Canadian pension fund Borealis and the Greater Manchester Pension Fund, have reportedly run up a £3m bill in advisory costs during the bidding process and are now awaiting the next move by BAA.