Thames Water expands into America with pounds 575m agreed takeover of E'town
Tuesday 23 November 1999
In what marks the second major move by a UK water company into the North American market, Thames is paying pounds 368m in cash and assuming pounds 207m in debt to acquire the New Jersey-based water company, E'town.
The $68-a-share offer represents a 31 per cent premium to E'town's closing share price last Friday and is the second biggest foreign takeover of a US water company after Lyonnais des Eaux' $2bn purchase of United Water.
Analysts fretted, however, that Thames may have overpaid and its shares fell by 35.5p or nearly 4 per cent to 884.5p. As a multiple of turnover, operating profits and earnings per share, the price paid by Thames is significantly higher than that paid earlier this year by Yorkshire Water, now renamed Kelda, for the Connecticut-based water company Aquarion.
Bill Alexander, chief executive of Thames, said, however, that the E'town deal offered strong growth potential in a market that is forecast to grow in size to $70bn a year within the next four years.
The takeover will lift Thames' gearing to over just over 100 per cent but Mr Alexander said the company still had the firepower to fund a similar sized deal without needing to tap shareholders for more finance through a rights issue.
A more likely strategy however will be to bolt on other smaller privately- owned water companies in the New Jersey area and bid for privatised municipal water contracts.
Analysts suggested that Thames' decision to announce a major US acquisition just three days before the UK water regulator, Ofwat, unveils its final set of price controls showed that Thames was comfortable with the 12 per cent cut in charges for next year proposed by Ian Byatt of Ofwat.
Thames has been actively looking for a US acquisition for the past year and began negotiations with E'town three months ago. The company supplies 234,000 customers and made operating profits last year of $51.6m on turnover of $145.5m.
Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'
Emergency call 'started off dumb, but got pretty serious'
Greatest mystery about the hit BBC1 show is how it continues to be made at all, writes Grace Dent
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Axe wielding man shot dead after attacking four New York policemen on busy street
- 3 Watch what happened when food critics were unknowingly served McDonald's
- 4 Jimmy Carr's Oscar Pistorius joke goes a bit too far at the Q Awards
- 5 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
Renee Zellweger on plastic surgery rumours: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
FCKH8: YouTube reinstates provocative anti-sexism video showing young girls swearing
This 'woman calls police to order pizza' story isn't going where you're expecting
Axe wielding man shot dead after attacking four New York policemen on busy street
Jimmy Carr's Oscar Pistorius joke goes a bit too far at the Q Awards
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...