BAA has battled long and hard against a takeover
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Directors of airports operator BAA have backed a takeover by Spanish building group Ferrovial, the BBC has learned.
Following a secret "auction", BAA has agreed to a 950p a share offer, which values the firm at £10bn, BBC business editor Robert Peston said.
Ferrovial had until midnight on Monday to table a final offer for BAA, which operates seven UK airports.
Ferrovial had been battling against a consortium led by US investment bank Goldman Sachs to win control of BAA.
According to reports , Goldman Sachs had tabled an offer for the group, which involved paying 940p for each BAA share and a special dividend of 15.25p per share.
However, that offer is unlikely to be enough, according to the BBC business editor.
Out of the running?
According to Mr Peston, BAA's directors have agreed to recommend the Ferrovial offer to shareholders - on condition that a break fee will be paid by BAA should it decide to accept another offer.
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BAA PASSENGER NUMBERS*
Heathrow - 67.7 million a year
Gatwick - 32 million
Stansted - 22 million
Southampton - 1.5 million
Glasgow - 8.7 million
Edinburgh - 8 million
Aberdeen - 2.7 million
*Source: annual BAA figures
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BAA's decision does not mean Goldman Sachs is out of the running - it has until 16 June to come back with a better offer, but any bid would also have to cover BAA's break fee, Mr Peston said.
BAA, which operates airports handling 63% of all air passengers entering or leaving the UK, has until now been bitterly resisting being taken over.
BAA refused to comment on the report. An announcement is expected early on Tuesday.
An agreement will bring to an end the takeover saga which began in February when Ferrovial said it was considering an approach for the Heathrow Airport operator.
Two months later the Spanish group made a hostile approach to BAA.
Controversy
Goldman Sachs also stirred up controversy when it attempted to buy the business rather than acting in its more customary role as an adviser.
Even before Monday night's decision by BAA to sell, the future of the airport group had become uncertain.
At the end of last month, the Office of Fair Trading, the competition watchdog, announced that it might examine whether BAA's dominance as an airport operator was against the public interest.
BAA's debt will increase greatly under the ownership of either Goldman or Ferrovial.
However, both bidding groups insist that the costs of servicing this debt would not lead to them cutting hugely expensive investments being made by BAA - such as the construction of Terminal 5 at Heathrow.
Shares in the group surged on the UK market amid investor hopes that the takeover saga would come to an end by a midnight deadline set for Ferrovial to make its final offer for the group.
Its shares closed 23p, or 2.54%, higher at 928p.
BAA - which owns seven UK airports including Stansted and Glasgow, as well as interests in the US, Italy and Hungary - is a popular takeover target for companies hoping to exploit the surge in air travel worldwide.