Pennon given green light for merger by UK competition watchdog

(Alliance News) - Pennon Group PLC on Friday said the UK Competition & Markets Authority cleared ...

Alliance News 14 June, 2024 | 11:01AM
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(Alliance News) - Pennon Group PLC on Friday said the UK Competition & Markets Authority cleared a merger after mitigation proposals were put forward by the water company.

Back in January, the Exeter, England-based utility announced the acquisition of Sumisho Osaka Gas Water UK Ltd, the holding company of Sutton & East Surrey Water, in a deal with a GBP380 million enterprise value.

Plans to merge SES with Pennon's South West Water business caused concern for the competition regulator, which immediately served an initial enforcement order on the company in relation to the acquisition.

In February, prior to launching a formal investigation into the deal, the CMA raised the issue of whether the deal would prejudice the water regulator Ofwat's ability to make comparisons between water enterprises. The CMA subsequently invited comments relating to the matter.

An official investigation commenced on March 7, although by May the CMA suggested there were "reasonable grounds" to clear Pennon's acquisition should acceptable undertakings be made.

Pennon offered to provide reporting for Sutton & East Surrey Water separate from the company's other entities in order to address the CMA's concern regarding Ofwat.

"The proposed undertakings would enable Ofwat to maintain a separate wholesale water price control for SES, and the flexibility to maintain different or consistent performance targets and incentives," the CMA said.

Following a period of evaluation and public consultation, the merger of SES and South West Water has been accepted with the proposed undertakings in place.

Pennon shares were up 0.5% to 602.00 pence each in London on Friday morning.

By Elijah Dale, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Pennon Group PLC 642.50 GBX -0.46 -

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