WestLB ups its bid for Anglian to £960m

AWG, the water and utilities group, was yesterday under siege for the second time this year from WestLB, which intends to mount a £960m bid for the company.

WestLB, the German finance house with its high-flying banker Robin Saunders, is backing an investment vehicle, Bream, in pursuing the bid and yesterday put a new proposal of an all-cash offer in the range of 520p to 545p a share.

The new offer tops the initial approach WestLB made in January of 510p, which AWG rejected. It represents a maximum 33.6 per cent premium on the closing price of AWG's shares on the day before its January approach. It is a 30.4 to 36.7 per cent premium to the average price of AWG shares in the three months to the end of January 2003.

But AWG said yesterday that the upper end of the latest proposal "remains well short of an acceptable price". Some analysts have said AWG could be worth up to 700p a share. The shares yesterday closed at 534p, valuing the company at £944m.

Four utility industry veterans including Gordon Morrison, brother of Fraser Morrison from the Morrison Construction company, lead Bream. AWG bought Morrison in 2000 and is now suing Fraser Morrison and another director for £130m for performance failures.

Bream said yesterday it would have to get to the bottom of six issues that may affect AWG's value before it would make a firm offer.

These include its pension fund deficit, which is about £129m, the planned £200m disposal of its international business, property sales, the company's debt position, and its cash flow.

Bream yesterday accused AWG's board of stonewalling its approach, saying it had "refused to engage in formative discussions regarding value". Francis Gugen, a director at Bream, said: "We believe this is a fully priced proposal. All we have asked for is the normal acceptance of access so we can get in to a position where we can make a bid. The management have frustrated us, and it is time the shareholders were given the choice of a ready cash offer."

AWG said the major stumbling block to opening up discussions with Bream has been WestLB's interest in Mid Kent Water. A bid by WestLB would lead to a water merger referral to the Competition Commission.

This obstacle, according to WestLB, has now been removed after actions to dispose of its stake in the water firm.

A statement from AWG yesterday said it had made "clear that it would be prepared to consider any proposal that was in the interests of its shareholders and was capable of being delivered without a mandatory reference to the Competition Commission". After news from WestLB that this may be avoided, AWG said it was making arrangements to meet with the Office of Fair Trading to discuss the matter.