After missing out last October in its bid to acquire South Staffordshire Water, Terra Firma is buying East Surrey Holdings, a UK water utility. Acquisition vehicle Kellen Acquisitions is offering 525p in cash per share and a 10% dividend, valuing the company at £453m. The total is 12.6% more than the April 6 share price, before the target said it had received a takeover approach. Barclays and Citigroup are arranging £458m in debt for the deal.
South Staffordshire was firmly acquired in October by AquaInvest, an investment company owned by the Bahrain’s First Islamic Investment Bank. Hastings Funds Management bought Swan Group, which owns Mid Kent Water, in February for £241.3m.
The offer for South Staffordshire was a premium of 23% to the company’s sum-of-the-parts valuation, according to research from Merrill Lynch. It is also an 11% premium to what Hastings paid for Mid Kent Water.