Airports group BAA is set to return about 1 billion pounds ($1.88 billion) to shareholders as part of a defence package to see off a hostile bid from Spain's Ferrovial, British newspapers reported.
BAA, which owns the world's busiest international airport London's Heathrow, has rejected the 8.75 billion pound takeover bid from Ferrovial as being too low. It has also rejected an approach earlier this year from a consortium led by US investment bank Goldman Sachs. The Sunday Telegraph quoted an executive close to the firm as saying BAA had to "find that sweet spot of giving the maximum return to shareholders without spooking the regulator".
The Sunday Times said the defence package would offer investors the 1 billion pound cash payment but would also outline an alternative way to value BAA's regulated asset base.
A BAA spokesman declined to comment on the reports.
BAA has until May 29 to present its official defence document against Ferrovial's takeover offer. Ferrovial has until June 5 to make its final offer at which point shareholders would have 14 days to accept.