Agbar ‘advised’ over Bristol Water sale
As WET NEWS went to press, momentum was building over a possible sale of Bristol Water by its Spanish owner, Agbar. It is understood that Agbar has been seeking advice from Citigroup and could realise nearly £400M from a sale.
Agbar, which bought the utility five years ago for just over £360M, saw Bristol Water’s pre-tax profit plummet from £23.1M to £7.6M in the year to May 31 following what chairman Moger Woolley described as one of the most unusual years in the company’s long history.
The company had not faced one of the severest Decembers and driest years in its history but the board’s rejection of Ofwat’s price limits and related obligations for the five years to March 2015 resulted in considerable effort dealing with the referral to the Competition Commission (CC).
He said Bristol Water’s underlying performance had been stable but the determination by the CC had resulted in a £10M increase in the depreciation charge on infrastructure assets. Commenting on the possible sale, Clive Mottram, senior associate in the Water Group at international law firm Eversheds, said: “There have been a number of instances of media speculation regarding possible takeover activity in the water sector and a disposal of Bristol Water by Agbar is likely to fuel that fire. It has been widely assumed that a merger of two water and sewerage companies is off limits, in order to maintain a sufficient number of separate, independent companies for Ofwat’s comparative competition regime.”
In 2009, the Cave Review of competition and innovation in water, whilst recognising the value of comparative competition, also recognised that there may be benefits to water mergers.