OCTOGENARIAN tycoon Li Ka-shing has agreed to buy Northumbrian Water for £2.4bn – the biggest takeover of a UK-listed company this year.
CKI, the investment consortium fronted by Li, has agreed to pay 465p a share – up from just 295p in January – as well as offering a final dividend, taking the total value to 475p a share.
The deal is backed by both the Northumbrian board and its largest shareholder, the Ontario Teachers’ Pension Plan. CKI has also sold Cambridge Water to a division of HSBC, making regulatory obstacles unlikely. Shares in peers Severn Trent, Pennon Group and United Utilities were all buoyed yesterday by the deal.
Northumbrian assets will be held by a new company called UK Water.
The deal strengthens Li’s grip on UK infrastructure, following last year’s takeover of EDF Energy’s UK electricity distribution network for £5.8bn.
Li, whose savvy deals have earned him the nickname “superman”, is a high-school drop out who built a plastic flower business into a global empire that includes Hutchison Whampoa.
Analysts are now speculating Ka-shing could snap up more European infrastructure firms.
MEET THE ADVISERS: NORTHUMBRIAN
Deutsche Bank acted as financial adviser to Northumbrian during the takeover talks.
Heading up the advisory team is Alan Brown, global co-head of the bank’s natural resources group (NRG), a position he assumed in 2007.
Working alongside him was Omar Faruqui, a managing director in Deutsche Bank’s UK M&A team, who also advised Arriva on its acquisition by Deutsche Bahn last year.
Martyn Nicholas, a director in NRG and Martin Pengelley, a director in corporate broking, were also on the team.
Deutsche Bank is a longstanding advisor to Northumbrian, with the bank leading its IPO in June 2003. It was appointed sole corporate broker in January 2004.
Deutsche Bank was also an adviser on the last major takeover of a UK-listed company, the controversial Kraft acquisition of Cadbury, on which the bank advised Kraft.
Deutsche has risen to become the number one adviser on UK and continental European regulated utility deals.