Hyder, the troubled Welsh multi-utility, confirmed yesterday that is in talks that could lead to a cash offer for the company. The bidder is thought to be Nomura International, the Japanese bank. Nomura declined to comment yesterday.
Nomura is thought to be close to an agreed deal at a small premium to Thursday's closing share price of 265p. This would value Hyder at around £410m.
However, Hyder shares fell 30p to 235p yesterday as investors took profits in case the deal falls through or runs into trouble with the regulatory authorities.
Analysts said the Nomura deal may be the bet chance for Hyder, which has debts of £1.9bn and has been hit hard by the new price and investment regime implemented by the water and electricity regulators.
One analyst said: "Hyder is in a considerable pickle and it would be rash of the authorities to block a deal, as there may be no other bidders out there."
Another said: "The company needs some sort of financial re-structuring. It would be easier to do that without having to look after the interests of equity shareholders." Analysts said that if Nomura acquired Hyder it would re-finance the business and sell off some divisions.
Hyder was formed from the combination of Welsh Water and South Wales Electricity. It claimed yesterday that the bid was "one of a number of potential options being considered" as part of its strategic review. RWE, a German utility, has been linked with Hyder, but it has already run into regulatory problems with an attempted merger in Germany.
Nomura is conducting the discussions through its Principal Finance Group, which specialises in deals in whichit securitises the cash flow of businesses in order to raise funds. However, the prospect of a financial group buying a utility company could run into political as well as regulatory problems. Hyder is the biggest private sector employer in Wales and the new Welsh Assembly could raise objections.
Hyder recorded profits of £208m last year on sales of £1.3bn. However, profits are forecast to fall to £164m this year and £80m in 2001.Reuse content