Macquarie to buy RWE's Thames Water for $8.9 bln Australian group outbids rivals to secure U.K.'s biggest water utility PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Simon Kennedy, MarketWatch Last Update: 5:12 AM ET Oct 17, 2006
LONDON (MarketWatch) -- German utility RWE said late Monday it's agreed to sell Thames Water, the U.K.'s largest water utility, to a Macquarie Bank-led consortium for 4.8 billion pounds ($8.9 billion). The Australian bank reportedly outbid several rivals including Qatar Investment Authority, which had been seen by many as the frontrunner to acquire Thames Water. RWE (DE:703712: news, chart, profile) said it will take a book gain in the mid hundreds of millions of euros from the sale to the Macquarie-led consortium, dubbed Kemble Water. The consortium will also take on 3.2 billion pounds of debt as part of the deal, implying a valuation of 8 billion pounds for the firm. Shares in RWE slipped 0.7% in Frankfurt, broadly in line with a wider fall in the German market. Also see Europe Markets. RWE's shares had climbed more than 13% since late September as bid speculation intensified. Thames Water had also reportedly been a target for U.K. financier Guy Hands's private-equity firm Terra Firma and Australian energy group Alinta. Robert Miller-Bakewell, an analyst at Merrill Lynch said the price was higher than originally expected, though continued press speculation had raised expectations in recent weeks. Thames Water has been under increasing pressure to fix old and leaking pipes and costs from these improvements could easily reach 500 million pounds, Miller-Bakewell added in a note to clients. RWE said the transaction, which is subject to approval by the firm's supervisory board and antitrust authorities, is expected to close by early December. "The divestiture of Thames Water is a major milestone in RWE's strategy to focus on its core strengths and concentrate on the converging European electricity and gas markets," said Harry Roels, CEO of RWE. Thames Water is the second U.K. water company to be bought this month and the latest in a string of infrastructure acquisitions, in which Australia's Macquarie bank has been a key player. In early October AWG (UK:AWG: news, chart, profile) agreed to be bought by a group of Australian and Canadian pension funds, along with U.K. private equity firm 3i Group (UK:III: news, chart, profile) for about $4.12 billion. Macquarie's infrastructure and property funds own a string of toll roads, airports and utilities across the U.K., U.S. and Asia and manage over $66 billion of investments worldwide. See archived story. It was also an early bidder for the London Stock Exchange (UK:LSE: news, chart, profile) , with a 1.5 billion pound offer in late 2005, which the exchange swiftly rejected. Increased demand for infrastructure investments has seen bidding become more competitive. Macquarie missed out on acquiring the U.K.'s largest port operator, Associated British Ports (UK:ABP: news, chart, profile) , in June when Goldman Sachs (GS : The Goldman Sachs Group, Inc. News , chart, profile, more Last: 185.22+1.37+0.75%
4:15am 10/17/2006
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