Ferrovial: Building a New Future

Ferrovial: Building a New Future: "

Ferrovial: Building a New Future
Like others in the construction industry, the Spanish giant is diversifying into facilities management. That's why it spent $19 billion for BAA

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Ferrovial's name was in the headlines for months as it battled investment banking giant Goldman Sachs (GS) to acquire the British Airport Authority (BAA), operator of airports in seven cities in England and Scotland, including London's huge Heathrow. In the end, the Spanish construction giant carried the day over its richer rival with a $19.12 billion bid. But why was it so eager to dish out the big bucks for a string of airports?

The answer lies in the rapidly changing nature of the construction industry. Started in 1952, Ferrovial grew from building and maintaining tracks for Spain's state-owned railroad (hence its name) into the country's leading construction firm. Its greatest claim to fame: The Madrid-based company built the gorgeous and fiendishly complex Guggenheim Museum in Bilbao designed by Frank Gehry.

But construction is a highly cyclical and often low-margin business. So starting in the 1990s, Ferrovial, like many competitors, began diversifying into facilities management. It established a subsidiary called Cintra that runs toll roads and parking garages, many in Spain, and began shopping aggressively for similar opportunities around the world.

USING EXPERTISE. The diversification effort has been remarkably successful. Ferrovial now has 79,000 employees in 40 countries and booked revenues last year of $11.3 billion. It runs the Sydney Airport, the Chicago Skyway, parts of the London Underground, and Canada's 407 ETR toll road. All "