Suitors line up for Bristol Water

June 13, 2011

Japanese trading conglomerate Mitsui and Wessex Water are both in the frame today as possible suitors for Bristol Water. The company, which has 1.1m consumers on its books, was put up for sale earlier this month – with bids due in three weeks.

It was snapped up five years ago for £326m by Spain's Agbar, itself owned by French infrastructure giant Suez Environnement and Spanish bank La Caixa.  Suez has now asked Citibank to seek a buyer for a price expected to be in the region of £370m.

Mitsui was named over the weekend as one of several Japanese investors lining up bids along with other foreign infrastructure companies.

But Bath-based Wessex Water has emerged as a much more obvious suitor, subject to regulatory approval.  It already provides  sewage to Bristol Water consumers and the two companies issue a single bill for their services. 

Wessex was bought from bankrupt Enron in 2002 by Malaysian infrastructure group YTL. And today, although executive Wessex chairman Colin Skellett declined to comment directly about the Bristol Water auction, he said in the Financial Times: "We have an owner who has plenty of capacity to do other things. They have a large amount of cash."

Bristol Water, whose pre-tax profits plummeted from £23.1m to £7.6m in the year to May 31, became the first water company since the 1990s to appeal against Ofwat's latest pricing review which allowed it to raise prices by 7% over five years. The company said this seriously underestimated the costs needed to "deliver the things they want us to do" – and the Competition Commission subsequently allowed Bristol to raise its bills by 15%.

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