France's Vinci is taking advantage of a Brexit hit to UK asset prices to buy a majority stake in the UK's second-busiest airport, London's Gatwick, for £2.9 billion, the construction company said today.
The deal to buy a 50.01% stake gives Vinci, which already runs 45 airports in 12 countries, access to the world's largest metropolitan aviation market.
It is part of the company's drive to expand its most promising businesses.
Vinci Airports President Nicolas Notebaert signalled uncertainty over Britain's departure from the European Union next March had cut the price of buying into Gatwick.
He forecast that any hit to UK economic growth after Brexit was likely to be offset by a rise in tourism due to a weaker pound.
"Just a few months ago we would not even have dreamed of being able to acquire an unlimited licence in the London airports system for less than 20 times core earnings," he said on a conference call, referring to the price of the deal.
The acquisition is expected to close by June 2019.
It comes just days after drone sightings caused 36 hours of chaos for more than 100,000 travellers at Gatwick.
CEO Stewart Wingate, who will remain in his role, said the airport was working to avoid a repeat of the disruption.
30 miles (48km) south of London, Gatwick serves 228 destinations in 74 countries and is a major base for airlines including EasyJet and British Airways.
It handles over 46 million passengers a year, more than a quarter of the 170 million passenger journeys the London airports system - led by Heathrow - handled in 2017.
Vinci says Gatwick is the most efficient airport in the world and operates the busiest single runway, which in 2017 achieved a record 950 flights in one day.
Gatwick plans to serve growing demand by optimising its existing runway and boosting use of its standby one.
Vinci is buying Gatwick shares from existing shareholders.
Investment group Global Infrastructure Partners will halve its stake to 21%, while Abu Dhabi Investment Authority will own 7.9%, California Public Employees' Retirement System 6.4%, National Pension Service of Korea 6% and Australia's Future Fund Board of Guardians 8.6%.
The deal follows Vinci's purchase this year of the airport management portfolio of Airports Worldwide, which allowed it to enter the US and expand in Europe.
Notebaert said the deal would "not in the least" affect Vinci's interest in Paris airports operator ADP, which the government plans to privatise.
Vinci operates airports in countries including France, Portugal, Britain, Sweden, Serbia, Cambodia, Japan, US, Dominican Republic, Costa Rica, Chile and Brazil.
In 2017, its network handled over 180 million passengers.
To counter signs of weakness in its construction business, the company has been expanding into faster growing and more profitable concessions such as airports and motorways.
In 2017, Vinci Airports' managed activities revenue was €3.2 billion, with consolidated revenue at €1.4 billion.
Between 2014 and 2017, Vinci Airports' revenue grew 196%, driving the concessions business up 19.3%. Vinci Construction's revenue fell 9.5% over the same period.
