Spanish punt £54m on Cambridge Water

THE SPANISH electricity giant Union Fenosa yesterday dipped its toe into the UK water industry with an agreed £54m cash bid for Cambridge Water and hinted it was on the hunt for further deals.

THE SPANISH electricity giant Union Fenosa yesterday dipped its toe into the UK water industry with an agreed £54m cash bid for Cambridge Water and hinted it was on the hunt for further deals.

The offer, made through Union Fenosa's international arm, Ufacex, values Cambridge Water's ordinary shares at 436p - a premium of 11 per cent to their price the day before the company put itself up for sale in August.

Union Fenosa is understood to have beaten off competition from rival French water groups who already have a substantial presence in the UK water industry.

The offer has been accepted by shareholders owning 50.7 per cent of Cambridge Water's ordinary and non-voting shares, including its directors and the executive committee of the employees' investment club. In total, the workforce of 206 owns just under 16 per cent of the company. The bid is not subject to a mandatory referral to the Competition Commission since Union Fenosa has no existing interests in the UK water sector. However, the company said it intended to use Cambridge Water as its "flagship" for further investment in the British water industry.

Cambridge Water has 300,000 water customers and a further 25,000 gas and electricity companies. Its domestic bills will fall by £12 next year to £83 under the water regulator's new price curbs.

Robert Burgin, chief executive, said the board had accepted the Spanish bid because it would give the company the resources to meet its ambitious expansion strategy to become a multi-utility.

Union Fenosa wants to retain all the executive and non-executive directors and Mr Burgin said he foresaw no regulatory problems because the takeover would make Cambridge Water a stronger competitor. Cambridge Water has been the subject of bid speculation since last Easter when Anglian Water bought a 9.9 per cent stake.

The shares closed up 17.5p at 427.5p yesterday.