Kelda Receives Approach From Citigroup, HSBC Units

Kelda Receives Approach From Citigroup, HSBC Units (Update2)

By Nicholas Larkin and Paul Dobson

Nov. 22 (Bloomberg) -- Kelda Group Plc, which supplies water to about 4.7 million people in northeastern England, said it received an approach from a group including units of Citigroup Inc. and HSBC Holdings Plc. The shares rose to a record.

Kelda stockholders were offered 1,100.65 pence ($22.72) a share, the Bradford, England-based company said today in a statement distributed by the Regulatory News Service. That's 17 percent more than yesterday's closing price of 937 pence.

The shares gained as much as 15 percent to 1,075 pence, the highest since they started trading in July 1991. They were at 1,066 pence as of 3:49 p.m. U.K. time, giving Kelda a market value of 2.9 billion pounds.

Investors are attracted to U.K. water utilities because they provide ``safe, steady, regulated returns,'' Angelos Anastasiou, an analyst at Pali International Ltd. in London with a ``neutral'' rating on the stock, said by telephone today. ``There are people there who are totally willing to pay the premiums.''

Anastasiou said the bid may boost share prices for other water stocks. ``It looks good for the sector. You'd be mad to go against that trend,'' he said.

Shares of other U.K. water companies rose, including Severn Trent Plc, which jumped 9.2 percent. Northumbrian Group Plc climbed as much as 13 percent.

JPMorgan Chase & Co. and a group of investors last month agreed to buy Southern Water Capital Ltd. for 4.2 million pounds, including debt. Alinda Infrastructure Fund also in October agreed to buy South Staffordshire Plc, which was valued at a minimum of 400 million pounds including debt, people familiar with the sale said at the time.