Li keen on E.ON's UK assets
By Arno Schuetze and Denny Thomas |
January 25, 2011, Tuesday
|
Print Edition
Print Edition
HONG Kong billionaire Li Ka-shing is reported to be readying a 3.5 billion pound (US$5.6 billion) bid for E.ON's UK power networks, after a preferred Canadian and Abu Dhabi consortium walked away.
Li's investment unit, Cheung Kong Infrastructure, first approached the German utility late last year, hoping to expand a UK power portfolio that includes Electricite de France's network arm, the Sunday Times reported.
The tycoon has been expanding his business empire by buying into regulated assets in developed countries.
CKI had hired Deutsche Bank to advise it, the newspaper said. Deutsche declined to comment.
E.ON put its UK networks up for sale in December as part of a promise to investors that it would divest assets worth 15 billion euros (US$20 billion) through to 2013, in order to guarantee minimum dividends while it builds up new markets.
Sources familiar with the matter told Reuters yesterday that the Canada Pension Plan Investment Board and Abu Dhabi Investment Authority, the emirate's sovereign wealth fund, were no longer in talks to buy E.ON's UK electricity distribution business after having made an offer.
E.ON, the world's largest utility, had given the consortium until mid-January to make a firm bid and had hired JP Morgan to handle the sale, the Sunday Times reported last December.
E.ON, which has suffered a big hit to earnings from slumping power prices and industrial production in Europe, declined to comment. Depressed sector valuations have prompted interest from cash-rich companies outside the region which are looking for steady income-generating assets.
"It's a good time to do such an acquisition as Li can extract a bargain when Europe is struggling for a recovery," said Linus Yip, chief strategist at First Shanghai Securities.
Analysts said that the reported 3.5 billion pound price tag was in line with their valuations for the E.ON business.
Last year, Li used CKI and his other investment arm, Hongkong Electric, to buy the network business of French utility EDF, for 5.8 billion pounds.
Li's investment unit, Cheung Kong Infrastructure, first approached the German utility late last year, hoping to expand a UK power portfolio that includes Electricite de France's network arm, the Sunday Times reported.
The tycoon has been expanding his business empire by buying into regulated assets in developed countries.
CKI had hired Deutsche Bank to advise it, the newspaper said. Deutsche declined to comment.
E.ON put its UK networks up for sale in December as part of a promise to investors that it would divest assets worth 15 billion euros (US$20 billion) through to 2013, in order to guarantee minimum dividends while it builds up new markets.
Sources familiar with the matter told Reuters yesterday that the Canada Pension Plan Investment Board and Abu Dhabi Investment Authority, the emirate's sovereign wealth fund, were no longer in talks to buy E.ON's UK electricity distribution business after having made an offer.
E.ON, the world's largest utility, had given the consortium until mid-January to make a firm bid and had hired JP Morgan to handle the sale, the Sunday Times reported last December.
E.ON, which has suffered a big hit to earnings from slumping power prices and industrial production in Europe, declined to comment. Depressed sector valuations have prompted interest from cash-rich companies outside the region which are looking for steady income-generating assets.
"It's a good time to do such an acquisition as Li can extract a bargain when Europe is struggling for a recovery," said Linus Yip, chief strategist at First Shanghai Securities.
Analysts said that the reported 3.5 billion pound price tag was in line with their valuations for the E.ON business.
Last year, Li used CKI and his other investment arm, Hongkong Electric, to buy the network business of French utility EDF, for 5.8 billion pounds.
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