Li Ka-shing’s Group in $9.1 Billion Bid to Buy EDF’s U.K. Unit

Li Ka-shing’s Group in $9.1 Billion Bid to Buy EDF’s U.K. Unit


July 30 (Bloomberg) -- A group led by Hong Kong billionaire Li Ka-shing’s Cheung Kong Infrastructure Holdings Ltd. has offered to buy Electricite de France SA’s U.K. power networks unit for 5.8 billion pounds ($9.1 billion).

Cheung Kong Infrastructure, subsidiary Hongkong Electric Holdings Ltd. and the Li Ka-shing Foundation have jointly bid to buy the assets, according to a filing to the Hong Kong stock exchange today. The offer is subject to formal approval by the seller and the Commission of the European Union, it said.

The utilities and roads company said in May it is on EDF’s shortlist of bidders for three U.K. networks. Cheung Kong Infrastructure has invested in gas, water and road assets in Australia, Canada and the U.K. to counter slowing growth in Hong Kong’s power market. The company said last year it has a HK$10 billion ($1.3 billion) “war chest” for acquisitions and is in talks to buy more than 10 projects in North America and Europe.

“The company is looking for sizeable assets overseas with good returns,” said Gary Chiu, an analyst at HSBC Securities Asia Ltd. in Hong Kong. “The U.K. has a good regulatory environment and stable earnings.”

The Financial Times had earlier reported Cheung Kong Infrastructure had won the deal.

Li, 82, is Hong Kong’s richest man and was estimated to be worth $16.2 billion by a Forbes magazine survey in March 2009. He is dubbed "Superman" by Hong Kong’s media because of his track record for investing and correctly predicted in 2007 that China’s stock market was in a "bubble."

Trading Halt

Cheung Kong Infrastructure had earlier asked for trading in its shares to be halted today ahead of an announcement of a “price sensitive” transaction. The stock has fallen 2.2 percent this year compared with a 4.4 percent decline in the benchmark Hang Seng Index.

EDF’s U.K. assets have a value of about 4 billion pounds, Cheung Kong Infrastructure Chief Operating Officer Andrew Hunter said on March 4, adding that’s not necessarily the size of the company’s bid.

The company yesterday reported a 48 percent drop in first- half net income HK$2.03 billion after making a one-off gain last year selling assets.

Paris-based EDF, Europe’s biggest power producer, got at least two preliminary bids from the Hong Kong company and a group led by Australia’s Macquarie Group Ltd., a person familiar with the matter said July 16. Deutsche Bank AG and Barclays Plc were advising EDF on the sale.

EDF Assets

Macquarie partnered Abu Dhabi Investment Authority and the Canadian Pension Plan. The group was advised by Goldman Sachs Group Inc., Lexicon Partners and Macquarie Capital Advisers. Cheung Kong Infrastructure was advised by RBS Corporate Finance, a unit of Royal Bank of Scotland Group Plc.

EDF Chief Executive Officer Henri Proglio wanted to sell the network to help reduce debt after the nuclear power utility expanded into the U.K. with the purchase of British Energy Group Plc in 2008. The company needs to invest billions of euros at home to maintain France’s 58 atomic reactors.

EDF’s U.K. network serves about 7.8 million people in London and southeast England. It includes about 170,000 kilometers (105,633 miles) of underground cables and overhead power lines, as well as 66,300 substations, according to the company’s website. EDF valued the regulated part of network at about 4 billion euros ($5.1 billion) at the end of 2008.

Cheung Kong Infrastructure’s assets overseas include a stake in the U.K. energy company Northern Gas Networks Ltd. In April, the company agreed to pay 211.7 million pounds for a stake in the U.K. electricity producer Seabank Power Ltd. from BG Group Plc.

About two-thirds of Cheung Kong Infrastructure’s revenue was generated by its overseas businesses last year, according to data compiled by Bloomberg.

source: bloomberg.com