NORTHUMBRIAN Water has refused to rule out a takeover bid by one of Hong Kong's richest men.
The utilities firm run by CEO Heidi Mottram, which has a £33m waste-to-energy treatment facility at Bran Sands, has been the subject of buy-out talks for several months.
Last year there were rumours that Canadian pension fund Ontario Teachers, which owns 27% of Northumbrian, was about to launch a full takeover bid.
Now Hong Kong-based Cheung Kong Infrastructure Holdings is considering a potential cash offer for the Durham-based firm.
Last year Cheung chairman Li Ka-shing was named by Forbes magazine as Hong Kong's richest person with a net worth of $21.3 billion. His wealth had gained $5 billion over the last 12 months.
Yesterday Northumbrian appeared to welcome the prospect of a bid - but said the ball remained firmly in Cheung’s court.
A Northumbrian spokesperson said: “It would be wrong to speculate on what happens next. We cannot comment on the price (that Cheung would have to pay) because we have not received any offer.”
Analysts say the bid could be worth around £5 a share, or £2.6bn.
Yesterday investment bank Goldman Sachs issued a statement valuing Northumbrian at 510p a share - almost a third higher than its current share price. A takeover by Cheung would give Northumbrian significant financial clout.
Controlled by billionaire businessman Li Ka-shing, the Hong Kong firm has infrastructure assets worldwide and recently completed a joint £5.8bn deal to buy 170,000 miles of electrical network covering London, the South-east and eastern England from French-owned EDF.
It also owns stakes in the Northern Gas distribution network and Seabank Power, an electricity-generating company near Bristol.
Investors are attracted to utility firms and power distribution networks due to their reliable income streams.
Northumbrian Water generates revenue from 2.6m customers in the North-east and a further 1.8m in the south under the Essex & Suffolk Water brand.
Their business helped the firm deliver a solid financial performance in the year to March 31, with revenues up 4.7% to £738.1m and pre-tax profits rising 6.3% to £181m.
Revenues could rise further once the Teesside Cast Products steelmaking plant in Redcar is up and running again.
The facility was an important source of income for Northumbrian Water before it was mothballed last year, discharging effluent to the firm’s Bran Sands plant.
Bringing it back on line will generate an estimated £600,000-a-year windfall for Northumbrian Water.
But the company has expressed concern over Government plans to transfer certain private drains and sewers into the ownership of water companies.
The firm predicts the move will ramp up its costs by £20m and plans to make that up by hiking prices.
