Spain's Grupo Ferrovial edged closer to a £10.3 billion (€15 billion) takeover of BAA yesterday, raising its stake in the world's largest airport operator as talks between BAA and a rival bidder broke down.

BAA said it was no longer in talks with a consortium led by the US investment bank Goldman Sachs, which includes AIG, Canadian investment fund Borealis, Commonwealth Bank of Australia's Colonial First State, Abu Dhabi investment firm Mubadala and Ontario Teachers Pension Fund.

"Talks have ceased," the US investment bank said. "Accordingly, the consortium announces that it will not proceed with an offer for BAA."

BAA agreed a £10.3 billion cash bid from the Ferrovial consortium, which also includes Canada's Caisse de dépôt et placement du Québec and Singapore's GIC Special Investments, only two days ago.

The UK's takeover panel had given the Goldman consortium until June 16th to make a firm offer or walk away.

Yesterday, the Ferrovial consortium moved to boost its stake in BAA to block any rival bid by snapping up 140 million BAA shares at 935p apiece, increasing its stake to about 28.7 per cent.

The Goldman consortium had initially offered 955¼p a share, including the declared final dividend.

But the BAA board spurned Goldman's offer in favour of Ferrovial's lower bid of 935p a share and an additional final dividend of 15¼p a share, making a total offer of 950¼p.

BAA is understood to have preferred the Ferrovial bid partly because it offered shareholders a possibility to take part of the cash offer in shares in a new vehicle, Altitude Assets, which may hold a stake of 5-10 per cent in the newly-created holding company for BAA. BAA shares closed down 7p at 928p yesterday.

- (Financial Times service)