US-owned Midlands seeks to buy water company
Saturday 29 May 1999
The company's number one target is thought to be Severn Trent, which is valued at pounds 3bn.
However, Midlands would only proceed with a takeover on an agreed basis and Vic Cocker, chief executive of Severn Trent, has indicated he is not interested in merging with an electricity company.
Mike Hughes, the chief executive of Midlands, said yesterday that the company's aim was to double in size over the next three years by adding a water company to its existing electricity distribution business.
"We have looked at one or two companies and there is a lot of discussion going on in the market place. Severn Trent is a big company and it is located where we are, but it has not got a `for sale' sign up," he added.
Midlands Electricity's interest in buying a water business will confirm the fears of companies such as Thames Water, which has warned that the industry is in danger of being swallowed up by foreign-owned utilities.
Thames Water is pressing the Government to abandon its veto on mergers between British water companies, arguing that consolidation is needed to make the industry internationally competitive. Wessex Water was taken over last year by Enron of the US, and Northumbrian Water is owned by Lyonaise des Eaux.
Midlands was acquired three years ago by two American utilties, General Public Utilties and Cinergy for pounds 1.73bn. National Power is in the process of buying Midlands' supply arm in a deal valuing the business at about pounds 300m.
If Midlands succeeds in acquiring a water company it would join a growing band of multi-utilities that includes Scottish Power, which owns Southern Water, United Utilities, which owns Norweb. and North West Water, and Hyder, the owner of Swalec and Welsh Water.
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