WestLB makes second AWG approach

The German bank’s private equity unit has indicated that it is willing to offer between £918m and £961m for the UK-listed utility group.

The private equity unit of German bank WestLB has reconfirmed its interest in UK utilities group AWG, declaring that it would offer as much as £961m (E1.4bn) to take the company private.

The revised proposal from WestLB Principal Finance is an all-cash offer in the range of 520-545 pence per share, a premium of at least 27.5 per cent to the closing price of AWG’s shares on 30 January 2003, the day prior to the original approach, and a premium of at least 30.4 per cent over the average price of AWG’s shares in the three months to 30 January 2003. 

 

In February, WestLB said it had approached the board of AWG, the holding company of Anglian Water, with an all-cash offer of 510 pence per share, which would value the business at £900m. The AWG board though has remained resistant to the approach.

 

“AWG’s Board has refused to engage in formative discussions regarding value and has refused to contemplate potential avenues by which an offer could eventually be put to shareholders,” Bream Investments, the bidding company formed by WestLB, said in a statement. “In order to take matters forward, Bream continues to seek the opportunity to discuss its proposals and areas affecting value directly with AWG’s Board.”

 

The improved offer is expected to be rejected by the board of AWG, which is thought to be holding out for a price of around 600 pence per share. In a statement, the group said: “AWG believe that the upper end of their latest proposal also remains well short of an acceptable price.”

 

In the six months to 30 September 2002, AWG reported turnover of £945m and operating profit of £154m, slightly down on the same period in 2001 (£158m).


If the AWG offer goes ahead, it would be the second large transaction carried out by WestLB since the German bank agreed to provide Robin Saunders, head of the principal finance unit, with a £3bn buyout fund. Last month, the unit announced it was to buy UK cinema chain Odeon from private equity house Cinven in a transaction worth £430.6m. In 2001, WestLB led a £106m management buyout of UK regional utility firm Mid-Kent, a company which Saunders now chairs.