Cheung Kong Infrastructure Holdings

CKI considers takeover of UK water firm

PUBLISHED : Wednesday, 29 June, 2011, 12:00am
UPDATED : Wednesday, 29 June, 2011, 12:00am

Cheung Kong Infrastructure (CKI), a company controlled by Li Ka-shing, has made an offer to acquire British firm Northumbrian Water Group, according to Takeover Panel, a British agency that manages mergers and acquisitions.

'CKI is in the preliminary stages of assessing a potential cash offer for Northumbrian Water. There can be no certainty that an offer will be forthcoming,' the Hong Kong-listed CKI announced yesterday.

In a statement on June 27, Northumbrian Water, which is listed in London, said that so far it had not received any offers from CKI.

Neither of the companies would make any further comment. CKI stock rose 0.4 per cent to HK$39.60 yesterday. Northumbrian Water's London shares fell 1 per cent to GBP4.

The British firm's stock jumped 8 per cent to GBP4.14 on Monday, valuing the company at GBP2.1 billion (HK$26 billion).

Northumbrian Water provides water and sewage services to 2.6 million people in northern England plus water services to 1.8 million people in southern England, according to the company's website. In the fiscal year to March 31, Northumbrian Water's revenue rose 4.7 per cent to GBP738.1 million, while its profit soared 45.2 per cent to GBP178.4 million. It had a net debt of GBP2.3 billion as of March 31.

CKI prefers acquiring infrastructure assets in markets that share the same Commonwealth legal framework, such as Britain, Australia and New Zealand, CKI group managing director Kam Hing-lam said earlier.

In November, CKI and three other organisations controlled by Li completed their GBP5.78 billion acquisition of the British electricity networks of EDF Energy, a unit of the French state-controlled energy conglomerate EDF, the largest acquisition by a Hong Kong group in Europe and Li's biggest international acquisition.

Shortly after completing that deal, Kam said his company was studying more than 10 acquisition opportunities around the world. It was estimated that in January CKI had HK$5 billion in cash and a net debt-equity ratio of 8 per cent, giving the company ample resources for more acquisitions, said Pierre Lau, head of Asia-Pacific utilities research at Citi.

Not all of CKI's acquisition attempts in Britain have been successful. In October, it withdrew a bid for High Speed 1, the fast-rail link between London and the Channel Tunnel in Britain.