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Northumbrian Water Group confirms bid offer from Hong Kong

Northumbrian Water Group (LON:NWG) announced this morning that it has received a non-binding takeover proposal from a Hong Kong based group without revealing any financial details.

Early this week, Hong Kong’s developer Cheung Kong Infrastructure Holdings (CKI) revealed it was mulling a cash offer for the Durham-based NWG, a water supplier operating in the north-east of England.

CKI is part of Cheung Kong Holdings, a conglomerate owned by Hong Kong’s richest man Li Ka Shing.

The acquisition of NWG would add to CKI’s existing water assets in Britain. CKI has owned Cambridge Water since 2004 and holds a 4.75 percent stake in water and sewage business Southern Water Group.

CKI has other interests in the UK's utility sector, having acquired Electricite de France’s UK distribution networks for £5.8 billion last year.

Northumbrian gained 4 pence (1 percent) this morning in London to reach 419.5 pence, giving it a market cap of £2.17 billion.

The FTSE 250 water company released its results for the year to 31 March a month ago, reporting revenues of £738.1 million, up 4.7 percent from the previous year. Pre-tax profits for the year were up 6.3 percent at £181 million.

In the full year report, Northumbrian offered an upbeat outlook for the current year. The group said that it has the funding to cover its operational expenses for the next three years, which should enable it to “maintain a strong financial performance”.

Shares in Northumbrian have risen sharply on takeover speculation last week, rallying from 370 pence at the start of the week to 413.5 pence by this Monday, when CKI revealed it was considering an offer.

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