Li Ka-Shing Makes Year's Top British Takeover Offer
Hong Kong’s richest man is bidding $3.9 bil. for British utility Northumbrian Water Group. The offer is likely to be consummated as the company’s board and leading minority shareholders are supporting Li Ka-shing’s bid.
Li’s Cheung Kong Infrastructure Holdings is bidding 465 pence ($7.57) per share of Northumbrian, 9.1 percent above the closing price before the bid was announced in July and 26.4 percent above June’s pre-rumor price. The offer includes assumption of debt of $3.7 billion, putting the deal’s full value at $7.6 billion. If completed, it would be the year’s biggest takeover of a listed British company.
The Northumbrian buy will expand Li’s bet on Britain. Last year he led a group to buy EDF’s British energy arm for £5.8 billion ($9.44 bil.). The current bid required Cheung Kong to unload Cambridge Water to HSBC in order to satisfy Britain’s monopoly regulators.
Li has been acquiring utilities, energy and infrastructure assets in Commonwealth countries like Australia, Canada and New Zealand, as well as in mainland China.
For the year ended March 31, Northumbrian reported profit of £178.4 million ($290.4 mil.), up 45 percent from the previous year. A final dividend of 9.57 pence will be paid in addition to the share price to be paid by Cheung Kong.
Li has won the backing of Ontario Teachers’ Pension Plan Board, the Canadian pension fund that owns 26.8 percent of Northumbrian as well as of minority shareholders J.P. Morgan Asset Management and Artemis Investment Management, which own 3.8 percent and 2.9 percent respectively.
Cheung Kong has promised to would retain Northumbrian’s management under CEO Heidi Mottram but will be placed under a newly-created entity Cheung Kong-owned entity called U.K. Water.
