South Staffordshire Plc acquires Cambridge Water
Cambridge Water (CW) has been bought by South Staffordshire Plc (SS) - just weeks after it was acquired by HSBC, concluding a chain of acquisitions.
The takeover of Cambridge Water by South Staffordshire, which also owns water supplier South Staffordshire Water (SSW), was announced today (October 4), although the amount paid for the company has not yet been disclosed.
However, the acquisition, although unconditional, will be automatically referred to the Competition Commission due to its ownership of SSW to avoid competition issues.
UK merger rules state organisations are not permitted to own more than one regulated water company in the UK, without the approval of the Competition Commission.
The chain of acquisitions was started by CW's parent company Cheung Kong Infrastructure Holdings Limited (CKI), which sold the water company to HSBC in August for an enterprise value of £74.8m. The sale followed its decision to purchase Northumbrian Water for £2.4bn, thus necessitating the disposal of CW to comply with UK merger rules.
The current takeover process is expected to take about six months to complete and during this period the two water companies will continue to operate independently.
Commenting on the acquisition, SS executive director Adrian Page said that no staff changes have been planned, water rates will remain fixed for five-year periods by water services regulator Ofwat, and the current price structure for CW customers will run until the end of March 2015.
Mr Page said: "Cambridge Water has sought and received assurances from us that the company will continue to be operated with a view to maintaining the current high standards of service delivery.
South Staffordshire is concerned to protect the integrity of Cambridge Water, an objective shared by the local non-executive directors and the management of the company."
Meanwhile, CW managing director Stephen Kay said: "At Cambridge Water our commitment is to deliver quality water and excellent service to our customers. This remains unchanged under our new owners.
"We know the management at South Staffordshire well and understand their commitment to the water industry both through their regulated business and having contracted their subsidiary companies over a number of years to install water treatment equipment."