Terra Firma forced to pursue East Surrey bid |
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Published
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Tue, 18 Oct 2005 19:05
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Takeover Panel has ordered private equity firm Terra Firma not to backtrack on the 453 million-pound bid for East Surrey Holdings. This news made the shares in the gas and water utility shoot up to 531.75 pence.
Mr. Guy Hands who runs Terra Firma had earlier made a bid to East Surrey, which provides water services in Surrey and gas distribution in Northern Ireland, in April. Hands wanted to acquire East Surrey for its productive Phoenix Gas distribution business it had in Northern Ireland. Hands's offer was based on what he thought was a price agreement made in 2004 with the Northern Ireland energy regulator.
But following the bid, the Northern Ireland electricity regulator, Douglas McIldoon, said the 2004 price agreement was not in place and it was in the process of reviewing its prices.
This made Mr Hands change his mind making him pull out of the bid. He then asked permission to back out of the deal in August. The Takeover Panel, however, disagreed saying that the regulatory changes were "not of sufficient substance" to allow Terra Firma to pull out of the bid. It also ruled that it must pay East Surrey holder 525 pence a share.
However, the Takeover Panel ruled yesterday that it must keep to its deal to pay East Surrey shareholders 525p a share. This happened despite the fact that there are normal get-out clauses in case of regulatory changes had been given to shareholders in the offer document.
Terra Firma’s Kellen Acquisitions Ltd, however, said it would honour the Takeover Panel's decision. It said: "Kellen continues to believe that there are significant business opportunities to arise from its ownership of East Surrey Holdings".
Shareholders had already approved of the deal. Citigroup and Gleacher Shacklock are advising Terra Firma, while Hawkpoint is advising East Surrey.
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Gas prices being artificially inflated by European monopolies, claims report 