Water firm's shares surge
SHARES in the parent company of Essex and Suffolk Water have jumped in value amid speculation over a potential �1.7billion takeover bid. Reports of a planned approach to Northumbrian Water from its biggest shareholder, Ontario Teachers' Pension Fund (OTPP), sent its shares as much as 10% higher.
SHARES in the parent company of Essex and Suffolk Water have jumped in value amid speculation over a potential �1.7billion takeover bid.
Reports of a planned approach to Northumbrian Water from its biggest shareholder, Ontario Teachers' Pension Fund (OTPP), sent its shares as much as 10% higher.
OTPP already holds a 27% stake in Northumbrian Water, having acquired a 25% stake the French group Suez in April 2005.
The group is thought to be keen to take Northumbrian private and was reportedly encouraged following Ofwat's decision in November on pricing for water companies up to 2015.
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It is understood to have been holding talks with banks to put together funding for a bid, as well having discussions with other funds about being partners in the deal.
Press reports suggested OTPP would have to make an offer at least 325p a share, 25% above Friday's closing share price of 258.6p, in order to succeed with a bid.
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But the fund, which controls assets worth around �54bn, is seen as being unlikely to offer a large premium, as its existing stake in the group is likely to deter counter bids from other groups.
Northumbrian Water provides 2.6million people in the North East with water and sewerage services, and a further 1.7 million mid-Essex and north Suffolk with water services only.
The group, which was among the first to accept the Ofwat price ruling, recently reported a 13% rise in interim pre-tax profits to �87m, broadly in line with expectations, due to much lower interest payments on its �2.3bn debt pile.
Northumbrian declined to comment on the bid reports yesterday but, in a scheduled update, said recent trading had been in lines with expectations.