RNS
3
May 2024
Pennon Group
plc
Sutton and East Surrey Water
- Acquisition update
Today, the Competition and Markets
Authority ("CMA") published the outcome of its Phase 1 merger
review following Pennon's acquisition of Sumisho Osaka Gas Water UK
Limited ("SOGWUK"), the holding company of Sutton and East Surrey
Water ("SES Water") and certain other ancillary businesses, which
was announced on 10 January 2024.
During this phase of its review, the
CMA has been considering whether there is a realistic prospect that
the acquisition of SES Water by Pennon is likely to prejudice
Ofwat's ability to make comparisons between water companies, such
that a referral for a Phase 2 review may be warranted. Throughout
this process we have worked transparently and collaboratively with
both Ofwat and the CMA to support and expedite their review and
will continue to do so. In the interests of procedural efficiency,
and based on its experience of previous merger reviews, Pennon has
accepted that the threshold for referral may be met in this case.
The CMA has accordingly confirmed today that it will refer the
transaction for a Phase 2 review unless acceptable undertakings in
lieu of a reference are offered.
Pennon intends to offer appropriate
undertakings to the CMA by 13 May 2024. As with the Group's
acquisition of Bristol Water, the proposed undertakings will ensure
that the acquisition does not prejudice Ofwat's ability to make
comparisons between water companies when carrying out its statutory
functions as a regulator, and ensure that the benefits of the
acquisition are shared among the Group's stakeholders.
In line with the CMA's guidance, the
CMA will then consider whether to provisionally accept the proposed
undertakings. Should those undertakings be provisionally accepted,
in line with standard procedure, the CMA would then launch a
consultation on those proposals.
Susan Davy, Group CEO, commented:
"We
are encouraged by this positive and expedient step forward in the
acquisition process. It is important to us that this deal receives
the appropriate level of scrutiny so that all of our stakeholders
feel reassured of the benefits of the acquisition and have trust in
the outcome.
"While the undertakings have not yet been agreed, we have been
through this process before with our acquisition of Bristol Water
and are confident that we will be able to offer a compelling
package of undertakings that will fully address the CMA and Ofwat's
concerns, and ensure that the benefits of the acquisition for all
customers and stakeholders are delivered."
For
further information, please contact
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Pennon Group plc
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+44
(0)1392 446 688
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Steve Buck
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Group Chief Financial
Officer
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Catherine Nash
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Interim Head of Investor
Relations
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Media Enquiries
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+44
(0)207 251 3801
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James Murgatroyd
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FGS Global
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Harry Worthington
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Background
Pennon's acquisition of 100% of the
issued capital of Sumisho Osaka Gas Water UK Limited, the holding
company of SES Water completed on 10 January 2024 and, in line with
standard procedure, is subject to CMA review under the Water
Industry Act 1991.
About Pennon
Pennon Group plc is a FTSE 250 listed
UK focused environmental infrastructure group, comprising South
West Water (incorporating Bristol Water and Bournemouth Water),
Pennon Water Services, Pennon Power, a stake in Water2Business and
now including SES Water and a number of other ancillary businesses
which make up the Acquisition.
South West Water is one of the
leading businesses in the UK water sector, providing water and
wastewater services to a population of c.3.5 million across nine
counties in the South West.
The Company provides over 870 million
litres of safe, clean drinking water every day, in addition to the
management of c.23,000km of sewer network used to transfer water
and surface water run-off to one of our 655 wastewater treatment
works where it is treated, tested and safely returned to the
environment.
Pennon Water Services is an 80:20
venture with South Staffordshire Plc, and provides retail water and
wastewater and value-added services to around 160,000 non-household
customer accounts across England and Scotland, and is focused on
delivering long-term, sustainable growth. Water2Business is a 30:70
venture with Wessex Water, providing retail water and wastewater
services to over 180,000 non-household accounts across England and
Scotland.
Further information on Pennon can
also be found on the Group's website,
www.pennon-group.co.uk