Enron Acquires Wessex Water for £1.36 Billion

Strategic Insights -

The surprise acquisition of Wessex Water by the American power company Enron for £1.36 billion has sent shockwaves through the water sector, fueling speculation that other British water companies may soon fall prey to bidders. The deal, worth £6.30 per share, has been described as a high price by analysts, who believe Wessex was worth no more than £4 per share. This significant deal marks a shift in the ownership of the water sector, which has remained largely in British hands since Northumbrian was acquired by France's Lyonnaise des Eaux in 1995.

Key Takeaways:

  • Enron has acquired Wessex Water for £1.36 billion, making it the fifth major privatised water company to be sold.
  • The deal marks a significant shift in the ownership of the water sector, with American companies increasingly looking to invest in the global water market.
  • The acquisition of Wessex Water has sparked speculation that other water companies, including Yorkshire, South Western, and Anglian, may soon be targeted by bidders.
  • The City has expressed concerns over the high price paid for Wessex Water, with one analyst valuing the company at no more than £4 per share.
  • The water sector has remained relatively stable since Northumbrian was acquired by Lyonnaise des Eaux in 1995, but consolidation is now on the horizon.
  • The previous government had prevented Wessex Water and Severn Trent from bidding for South West Water in 1996, but it is unlikely that Enron's acquisition will raise similar monopoly concerns.
  • The acquisition has boosted the shares of other water companies, with Yorkshire Water, Anglian Water, and South West Water all experiencing significant price increases.

Statistics:

  • The deal is worth £6.30 per share, making it one of the highest prices to be paid for a British water company.
  • Enron has predicted rapid growth in the global water market, which is valued at $300 billion.
  • The acquisition marks the first time an American company has acquired a British water company since Northumbrian was acquired by Lyonnaise des Eaux in 1995.
  • The water sector has been relatively stable, with only one change in ownership since privatisation, until now.
  • The previous government had prevented Wessex Water and Severn Trent from bidding for South West Water in 1996.
  • Shares in other water companies have increased significantly since Enron's acquisition, with Yorkshire Water rising 9.5% and Anglian Water increasing by 5.8%.

Sources:

  • "Wessex Water sold to Enron for £1.36 billion" by Jill Treanor, The Independent, no date provided.
  • "Water companies face threat of US takeover" by Jill Treanor, The Independent, no date provided.
  • "Enron's water ambitions" by Jill Treanor, The Independent, no date provided.
  • "Wessex Water sold to Enron" by BBC News, no date provided.
  • "Water companies facing takeover bids" by The Times, no date provided.