Vivendi Approved for Southern Water Bid

April 29, 2003
The UK government on Tuesday, gave the go-ahead for a £2.05bn highly leveraged bid by Vivendi Environnement and Royal Bank of Scotland for Southern Water, one of the UK's biggest water and sewage companies.

It is one of series of bids being considered by the water industry, which was privatized in 1989. WestLB, the German bank, last week raised its offer for AWG, owner of Anglian Water, from 520p to 545p a share, valuing the company at £1bn ($1.56bn).

Suez, the French water and electricity utility, is considering offers for Northumbrian Water, thought to be worth up to £2bn.

Melanie Johnson, competition minister, said she had accepted undertakings from Vivendi, another large French utility that it would limit its voting shares in Southern Water to no more than 25 percent.

Royal Bank of Scotland would initially take an 80.1 percent stake in Southern. It also had agreed "to appoint at least one director with substantial relevant experience of management of a water or sewerage undertaker," said Johnson.

In November, the minister rejected a majority recommendation by the Competition Commission that Vivendi be allowed to buy Southern in its own right. The company subsequently joined forces with the Royal Bank of Scotland in an attempt to overcome competition concerns.

Under the terms of the offer announced in February, Vivendi would acquire a 19.9 percent stake in Southern. The remaining 80.1 percent would be owned initially by the bank through a new holding company, Southern Water Capital.

The bank's interest would then be reduced to about 40 percent under plans to sell 51 percent of the holding company to other institutions

Source: Financial Times

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