Shares in water and gas utility East Surrey Holdings have fallen almost 9% following the news that private equity firm Terra Firma was to withdraw its GBP453 million takeover offer due to regulatory problems.
Terra Firma had reached an agreement to buy East Surrey, which runs Northern Irish gas distribution business Phoenix Natural Gas, southern English water utility Sutton and East Surrey Water and ES Pipelines, back in April. The deal received the backing of East Surry’s board.
However, delays due to regulatory problems believed to originate in Northern Ireland have resulted in Terra Firma revealing that it intends to file an application with the Takeover Panel to lapse the buyout proposal.
According to Reuters, the Northern Ireland Authority for Energy Regulation was considering changing the license framework for Phoenix Natural Gas in view of Terra Firma’s acquisition.
Following the development, speculation has emerged that Terra Firma’s announcement that it intends to withdraw is actually an attempt to encourage regulators to green light the acquisition. Meanwhile, East Surrey continues to support the takeover proposal.