22nd Dec 2021 10:18
(Alliance News) - Pennon Group PLC on Wednesday noted that the UK Competition & Markets Authority will move to a phase two merger review for the group's acquisition of Bristol Water UK Holdings Ltd, unless Pennon puts forwards acceptable undertakings.
The UK regulator in its assessment found that the merger would prejudice UK watchdog Ofwat's ability to set the industry cost allowance, including a loss of precision and affecting the relationship between costs and cost drivers, leading to the under or overfunding of individual companies.
The CMA now has until January 10, 2022 to make a decision on whether to accept any undertakings offered by Pennon. For its part, the Exeter-based water utility said it will offer such undertakings by the end of 2021, which will look to maintain separate price controls for the Bristol Water region.
"This combined entity would enable the most effective and efficient delivery of services for our customers in all the regions we serve, whilst also providing Ofwat with comparative cost and performance data," the company stated.
In June, Pennon had acquired Bristol Water for an equity value of GBP425 million and enterprise value of GBP814 million, however later in the month the CMA had served an initial enforcement order for the acquisition.
This order developed into an investigation by the regulator in September, to look into the takeover and find out if it was likely to prejudice UK watchdog Ofwat's ability to make comparisons between water companies.
Shares in Pennon were down 0.4% at 1,166.00 pence on Wednesday in London.
By Dayo Laniyan; [email protected]
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