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AWG confirms takeover offer

02/10/2006

Utilities firm AWG, the parent company of Anglian Water, has confirmed that it has agreed to a £2.2 billion takeover from a consortium including private equity firm 3i.

Following the announcement this morning, the company released a second statement confirming that it had received approaches from "certain third parties" in the wake of the offer, but stressed that there was "no certainty" that a rival takeover bid would be made for AWG.

AWG said that in the meantime, it still planned to recommend the 1,555 pence-per-share bid made by Osprey Acquisitions to its shareholders.

In addition to 3i, the Osprey consortium includes the Commonwealth Bank of Australia, Industry Funds Management and Canada's Pension Plan Investment Board.

AWG said that the consortium's offer for the whole of its operations, including facilities management firm Morrison, represented a premium of 14.2 per cent to its closing share price on September 13th, the last business day before the company announced it had received a takeover approach that might, or might not, lead to an offer.

Commenting on the deal, which would need to be approved by AWG investors, group chairman Peter Hickson said that the company's board had considered the offer by the Osprey consortium "very carefully" and was unanimously recommending it to shareholders.

Mr Hickson added that AWG's management had "transformed the company and delivered a sustained improvement in performance for both shareholders and customers".

"The offer represents an attractive opportunity for shareholders to crystallize value," he said.

A spokesperson for Osprey said that the consortium was "delighted" to have reached agreement over the bid with AWG's board.

"The AWG group has an excellent operational record and we have a high regard for its management," said the spokesperson.

"We are long-term investors and we are looking forward to supporting management's strategy of concentrating on delivering first-class service to customers and on its regulatory obligations while seeking further operating and capital expenditure efficiencies."

Last week AWG said that Anglian Water had "performed materially above management's expectations" during first-half trading, while the company's non-regulated businesses had performed as anticipated.

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