REG - Pennon Group PLC - Sutton and East Surrey Water - Acquisition update

PennonAnnouncement

03/05/2024 07:30

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RNS Number : 0819N  Pennon Group PLC  03 May 2024

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

 

 Pennon Group plc                                            +44 (0)1392 446 688
 Steve Buck              Group Chief Financial Officer
 Catherine Nash          Interim Head of Investor Relations

 Media Enquiries                                             +44 (0)207 251 3801
 James Murgatroyd        FGS Global
 Harry Worthington

 

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

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