The Competition and Markets Authority (CMA) has announced it’s considering whether the completed acquisition of Bristol Water by Pennon is or may be a merger.
The non-ministerial government department - which served its initial enforcement order on 15 June 2021 - is also investigating whether the deal could result in a “lessening of competition” in any market in the UK.
It comes after an announcement made by Pennon on 3 June, this year, that it had acquired 100% of an issued share capital of Bristol Water from its indirect shareholders. The Exeter-based water utility company made the purchase for an equity value of £425m, and an enterprise value of £8.1bn including assumed debt.
Speaking at the time of the announcement, Pennon’s chief executive Susan Davy said: “We see attractive opportunities to continue to invest in the Bristol Water business to deliver enhanced resilience and water security to benefit customers in Bristol and beyond. This latest acquisition, building on a strong heritage and history, firmly cements Pennon as one of the leading UK water and waste water companies.”
Additionally, in its latest annual report - published on the same day the CMA announced it would be investigating the deal - Pennon referenced it “expected to be reviewed” by the regulator, with a response “expected within the normal timescales”. It added an “inability to effectively integrate the acquired business could result in a failure to maximise the value of this transaction”.
Commenting on the news, Pennon Group told Credit Strategy: “Pennon’s purchase of Bristol Water on 3 June 2021 is being reviewed by the CMA. During the review period the businesses will be kept separate and will continue to function independently.
“In the meantime, we are working with the CMA and Ofwat to demonstrate the benefits of the acquisition for our customers and other stakeholders.”