'Superman' Li's Northumbrian Water tonic
Saturday 02 July 2011
The Hong Kong-based billionaire and business "superman" Li Ka-Shing has made an indicative cash offer for Northumbrian Water, the company said yesterday.
If the deal goes ahead, it will add the FTSE 250-listed water supplier to a growing list of British assets bought by the octogenerian entrepreneur's sprawling property-to-infrastructure-to-retail conglomerate in recent years.
Yesterday's statement from Northumbrian Water confirmed the speculation that has swirled around the company all week, pushing its shares up more than 13 per cent. The stock rose by another 1.5 per cent to close at 422p last night.
The first hint of an approach sent the stock soaring on Monday, when Mr Li's Cheung Kong Infrastructure (CKI) made a statement confirming that it was "in the preliminary stages" of assessing a "potential cash offer". But Northumbrian claimed to have no knowledge of the matter, stating unequivocally it had "not received any proposal which could result in an offer or possible offer for the company".
As the days passed with no further clarification, one local MP, Kevan Jones, berated CKI for leaving Northumbrian Water's 3,000 staff "in the dark" about their futures, even as others expressed concern that a foreign owner would not understand the North-east's desperate need for local, private-sector jobs.
But Northumbrian announced yesterday that is had received a non-binding indicative proposal from CKI regarding a possible cash offer, although with the usual disclaimer that there was no certainty that an offer would be made. So far, there is no detail available about the bid for the group, which has a market capitalisation of £2.2bn and debts of £2.3bn.
Northumbrian Water's major shareholder is the Ontario Teachers Pension Plan, whose 26.7 per cent holding is key to any deal. Options being discussed by City analysts include CKI taking over the remaining 73.3 per cent not held by Ontario. Although CKI is the first formal bidder for Northumbrian, its shares have risen more than 40 per cent since February thanks to the takeover talk. The company's most recent accounts, at the start of this month, detailed annual revenues up by 4.7 per cent to £738m as profits soared by 6.3 per cent.
Mr Li – the world's 11th-richest man on the Forbes Rich List – already has a significant presence in Britain through both CKI and its vast sister group, Hutchison Whampoa, which is active in retail, infrastructure, telecommunications and ports. CKI already owns Cambridge Water and holds 4.75 per cent of Southern Water.
Northumbrian Water provides water and sewage services to 2.6 million people in the North-east of England, and a further 1.8 million in East Anglia through Essex & Suffolk Water.
Tycoon's British assets
*Li Ka-Shing's interest in Northumbrian Water comes just a year after his Cheung Kong Infrastructure group paid £5.8bn for French electricity giant EDF's 100,000 miles of British power networks.
CKI also owns 50 per cent of the Seabank Power station near Bristol, 47 per cent of Northern Gas Networks (with a further 41 per cent owned by Power Assets, which CKI also part-owns), all of Cambridge Water and a 4.75 per cent stake in Southern Water.
Mr Li's Hutchison Whampoa group owns the 3 mobile phone network; London property including Chelsea's Lots Road power station, Belgravia Place and the Albion Riverside; the retail chains Savers, Superdrug and The Perfume Shop and major ports at Felixstowe, Harwich and Thamesport.
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