DealBook: Li Ka-shing Wins British Utility for $3.9 Billion

Mike Clarke/Agence France-Presse — Getty ImagesLi Ka-shing controls some of Hong Kong’s largest companies.

Li Ka-shing, the Hong Kong billionaire, has won the backing of the board of the Northumbrian Water Group for an acquisition that values the British utility at £2.4 billion ($3.9 billion).

Mr. Li’s company, Cheung Kong Infrastructure Holdings, has bid 465 pence for each Northumbrian share, in what would be the largest takeover of a listed British company this year.

The bid is 9.1 percent above Northumbrian’s closing price before the approach was announced last month and 26.4 percent above where it was trading before rumors of the deal commenced in June. Including the assumption of debt, the deal is worth $7.6 billion.

Cheung Kong sold Cambridge Water to HSBC in order to appease competition regulators. Still, the Northumbrian acquisition will extend Mr. Li’s reach in Britain, where he led a group to purchase EDF’s British energy arm for £5.8 billion last year.

Mr. Li, Hong Kong’s richest man, has accumulated utilities, energy and infrastructure assets throughout the developed world, with assets in Commonwealth countries like Australia, Canada and New Zealand, as well as mainland China.

For the year ended March 31, Northumbrian reported profit of £178.4 million, up 45 percent from the previous year. Its shareholders will receive a final dividend of 9.57 pence in addition to the 465 pence a share from Cheung Kong.

Ontario Teachers’ Pension Plan Board, the Canadian pension fund that owns 26.8 percent of Northumbrian, has committed to voting for the offer and abstaining from any rival bid. The minority shareholders J.P. Morgan Asset Management and Artemis Investment Management, which own 3.8 percent and 2.9 percent respectively, have sent nonbinding letters of support as well, Northumbrian said.

The Hong Kong company said it would retain the utility’s present management, led by the chief executive, Heidi Mottram.

Northumbrian will be subsumed under a new entity owned by Cheung Kong called U.K. Water.

Cheung Kong hired Royal Bank of Canada and HSBC as its financial advisers, while Northumbrian hired Deutsche Bank.

Article source: http://dealbook.nytimes.com/2011/08/02/li-ka-shing-wins-british-utility-for-3-9-billion/?partner=rss&emc=rss