2nd UPDATE: CKI Consortium In Exclusive Talks To Buy EDF's UK Electricity Unit

30th Jul 2010 08:00

(Adds statement from CKI, Hongkong Electric; EDF confirming it received offer; share prices.) By Aries Poon and Yvonne Lee Of DOW JONES NEWSWIRES HONG KONG (Dow Jones)--A consortium of companies controlled by Hong Kong tycoon Li Ka-shing plans to buy Electricite de France SA's (EDF.FR) U.K. electricity distribution networks for GBP5.8 billion (US$9.05 billion) and is in exclusive talks to finalize the deal, Cheung Kong Infrastructure Holdings Ltd. (1038.HK) and Hongkong Electric Holdings Ltd. (0006.HK) said in a joint statement Friday. The offer could become Li's fifth investment in the U.K. and comes as Hong Kong's richest man has been increasing his investments in the utility sector overseas--including in New Zealand, Australia and Canada--in recent years to broaden the earnings base of his companies given the difficulties of expanding in Hong Kong's mature market. EDF confirmed Friday that it has received an offer from a consortium of companies controlled by Li for its three U.K. low-voltage distribution grids. The offer by the CKI-led consortium, which includes Hongkong Electric and the Li Ka Shing Foundation, is subject to final acceptance from EDF, the statement said, adding EDF has granted the consortium a one-year period of exclusive talks to close the transaction. CKI's interest in the consortium is 40%, Hongkong Electric's is 40% and the foundation's is 20%, the statement said. CKI owns 39% of Hongkong Electric. The consortium outbid U.K. utility Scottish & Southern Energy PLC (SSE.LN) and a consortium comprising sovereign-wealth fund Abu Dhabi Investment Authority, Macquarie Capital and Canada Pension Plan, a person familiar with the situation told Dow Jones Newswires earlier Friday. The CKI consortium hired Royal Bank of Scotland Group PLC (RBS) as its financial adviser, while EDF hired Barclays PLC (BCS), Deutsche Bank AG (DB) and BNP Paribas SA (BNP.FR) to handle the deal, the person said. At 0655 GMT, CKI's shares were up 2.2% at HK$29.55 and Hongkong Electric's were 1.1% higher at HK$47.25. The benchmark Hang Seng Index was down 0.3% at 21,028. The companies' shares were suspended from trading in the morning session and resumed trading at 0630 GMT. CKI had cash and bank deposits totaling about US$1.28 billion at the end of June, while Hongkong Electric had about US$606 million. CKI and Hongkong Electric already own stakes in two water-supply projects in the U.K., as well as a gas distribution network and a power station. -By Aries Poon and Yvonne Lee, Dow Jones Newswires; 852-2802-7002; [email protected] (END) Dow Jones Newswires July 30, 2010 03:00 ET (07:00 GMT)