WestLB Principal Finance, the German bank’s private equity unit headed by Robin Saunders, is planning to launch a public-to-private offer for AWG, the holding company of UK-based utility Anglian Water.
In a statement to the London Stock Exchange today, WestLB confirmed that it had approached the bard of AWG to propose an all-cash offer of 510 pence per share, which would value the business at £900m. The announcement followed a verbal approach made by the firm on 31 January which was rejected by the AWG board.
AWG suffered from a low level of investor confidence in 2002, the result of a broader drop in valuation in the utilities sector. In November it announced plans to refinance the company in the debt market and return £500m to shareholders. This followed plans in August to separate the water unit from the group holding company.
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).
WestLB’s offer is at a 25 per cent premium to AWG’s closing price on 30 January. WestLB said it expects any offer would be subject to confirmatory due diligence and board approval.
The firm has not ruled out the possibility of a hostile offer.
In 2001, WestLB led a £106m management buyout of regional utility firm Mid-Kent, a company which Robin Saunders now chairs. The firm’s most recent work was in arranging the £426m financing for the new stadium under construction on the old Wembley site.
In November, WestLB reportedly rejected plans from Saunders to set up a stand-alone private equity division sponsors by the German investment bank. Saunders proposed to establish an independent private equity fund that would raise capital from third party investors, with the bank providing around ten per cent of the fund’s capital.