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British airport operator BAA today announced it had received and rejected a conditional cash offer from a consortium led by Spanish infrastructure company Grupo Ferrovial which valued BAA at £8.75bn.

In a statement to the London stock exchange, the BAA board said it had "no hesitation in rejecting [the] proposal, which does not begin to reflect the true value of BAA's unique portfolio of airport assets".

In a statement released this afternoon, Grupo Ferrovial said it was "disappointed" that BAA had rejected the proposal without discussion.

However. it added that it was the strong preference of the consortium to have an offer recommended by the BAA board and so would be willing to make a "small increment" to its initial offer to secure a recommendation and due diligence access.

The Ferrovial consortium, which comprised the company's subsidiary Ferrovial Infraestructuras SA, Canadian investment fund Caisse de depot et placement du Quebec and the Singapore government fund GIC, offered 810p per share for BAA.

The price represents a premium of 27% to the average share price of 637p for the month to 6 February, the day before speculation began about the possibility of an offer for BAA.

The offer was conditional on agreements over due diligence, additional pension contributions and the unanimous recommendation of the BAA board.

The bid followed Ferrovial's announcement last month that it was considering an offer for BAA. It was backed by debt finance provided by Citigroup, Royal Bank of Scotland and Banco Santander.

Marcus Agius, chairman of BAA, commented: "Since Ferrovial made its first announcement about BAA five weeks ago, attention has focused upon the value of our assets and the quality of our management. We believe that a period of exceptional opportunity lies ahead.

"Delivering enhanced value to our shareholders remains this company's first priority."

Airspace regulator the Civil Aviation Authority has already given potential BAA buyers of the need for an increased infrastructure spend to allow for anticipated increases in passenger numbers at UK airports.

BAA is already building Terminal Five at Heathrow airport, expected to be completed by March 2008, to cope with rising demand for air travel.

Ferrovial said that in the event of a successful bid, it would co-operate with the Government and the CAA to deliver runway and terminal development, with particular focus on increasing airport capacity in the South East.