WestLB to sell off Mid Kent Water

The german investment bank WestLB cleared the decks for its planned takeover of Anglian Water last night by putting its existing UK water business, Mid Kent Water, up for sale.

Mid Kent was bought by WestLB for £106m two years ago through a newly created subsidiary called Swan Group and could fetch up to £170m. The German bank has already had discussions with several potential private equity buyers, including, it is thought, Guy Hands' new venture Terra Firma.

The decision to sell Mid Kent resulted in the immediate resignation yesterday of Keith Tozzi, the chairman of the business and chief executive of its holding company Swan Group. He owns 8 per cent of Mid Kent Water.

Mr Tozzi had wanted to use Mid Kent as the springboard to create a bigger water company in south-east England and only this week spelt out his vision of a combined supplier taking in the French-owned Folkestone and Dover Water and parts of Southern Water.

He is now in discussions about his severance terms with Robin Saunders, the chairman of Swan and managing director of WestLB's Principal Finance Group, its private equity arm.

WestLB announced last month that it was considering a 510p-a-share bid for AWG, the owner of Anglian Water, valuing it at £900m and refused to rule out a hostile bid. AWG rejected the approach.