U.S. Water News Online
LONDON -- German power utility RWE AG has staked its claim to the global water industry big league with a 4.3 billion pounds (7.1 billion euros) agreed cash bid for Britain's Thames Water.
The 12.15 pounds per share purchase of Britain's largest water company creates the world's third-largest water and waste group behind France's Vivendi Environnement and Suez Lyonnaise des Eaux.
The German giant paid a 32.8 percent premium to Thames's closing price to combine its financial fire power with Thames's international water assets and expertise.
Thames has 23 million water customers in the Americas, the Middle East and Asia. RWE has 11 million in Germany and Hungary, backed by a group market value of 20 billion euros that makes it one of Europe's ``big six'' utilities.
For RWE Chief Executive Dietmar Kuhnt, the combination provides critical mass to target a sector with huge growth potential.
``These opportunities are driven by factors such as population growth, urbanization, and tougher environmental standards,'' Kuhnt told a news conference in London.
RWE expects global revenues for private sector water companies to grow to 430 billion euros by 2010 from 90 billion today, with U.S. operations and management deals the driver. Globally, water remains highly fragmented, but Vivendi, Suez, Thames and others are already exploiting consolidation opportunities in the United States and elsewhere.
The combined water operations are to be run out of London under Thames Water Chief Executive Bill Alexander. The partners hope to complete within 50 days after U.S. approvals.
``This is a growth story. It's not about cost-cutting,'' Alexander said. ``We see a bright future for the new combined business which can take advantage of our strong international position and RWE's European presence.''
Cash-rich but under pressure to find growth outside a very competitive German electricity market, RWE said it would finance 4.0 billion euros of the transaction from existing cash.
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