Thames Water rejects pounds 400m bid
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Your support makes all the difference.Thames Water has received a pounds 400m takeover offer from Generale des Eaux for its portfolio of non-regulated businesses. Though Thames has rejected the approach, it could raise the prospect of further bids for the business, as Chris Godsmark, Business Correspondent, reports.
The surprise move by General des Eaux, the French utility giant, demonstrates the turnaround in the fortunes of Thames' non-regulated businesses since they were last year forced to write off pounds 95m after a series of costly overseas diversifications.
Generale des Eaux, which owns two passenger train franchises in the South- east of England and four smaller drinking water companies, approached Thames earlier this year with an offer, understood to be worth pounds 400m in cash, for all of its non-regulated companies. Generale des Eaux has been one of the most aggressive companies in bids for overseas water contracts, with markets opening up across Asia and South America as state utilities seek private finance to repair decades of underinvestment.
Rumours of the approach have fuelled the Thames share price in recent weeks. The shares had outperformed the stock market by 9 per cent over the past two months until a plunge on profit-taking this week after the company announced a 7 per cent rise in pre-exceptional half yearly profits, to pounds 202m.
A Thames spokesman declined to discuss the bid approach last night. "We can never comment on market rumours," he said. A Generale des Eaux spokesman said there was "no substance" to the speculation. However City analysts yesterday said Thames had turned down the offer, which executives argued did not reflect the true potential of the non-regulated businesses. On Tuesday the combined operations reported a rise in profits of pounds 10m in the six months to the end of September, to pounds 19m.
Since the restructuring last year, Thames has exited from foreign infrastructure contracting operations, preferring to concentrate on bids to operate water and sewerage schemes.
Thames' international operations were given a strong boost this summer with a huge long-term contract to supply the eastern half of the Indonesian capital, Jakarta, with drinking water. In China, the first phase of a project to supply water to 2 million people in Shanghai has been completed.
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