UK Water Utility Kelda Gets $6.2B Offer From Citi, HSBC Group

Shares in UK water utility Kelda Group jumped 17% in London trading Thursday after the company said it had received a £3 billion ($6.18 billion) buyout offer from a consortium including Citigroup (C) and HSBC (HBC). Water utilities provide "safe, steady, regulated returns," Pali analyst Angelos Anastasiou said. "There are people there who are totally willing to pay the premiums." He said the bid may boost share prices for other water companies: "It looks good for the sector," he said. "You'd be mad to go against the trend." Last month J.P. Morgan Chase (JPM) and a group of investors agreed to buy Southern Water Capital for £4.2 billion from Royal Bank of Scotland (RBS). The proposed premium on Kelda's asset base, called by some a "best-in-class" utility, was in line with that payed for Southern Water, analysts said. Kelda's (KLDGF.PF) shares trade over the counter in the U.S. ETFs that allow U.S. investors to capitalize on global water strength include PowerShares Water Resources ETF (PHO), PowerShares Global Water (PIO), Claymore S&P Global Water (CGW) and First Trust ISE Water Index Fund (FIW). See also Dan Pritch's Investing in the Looming Worldwide Water Shortage.

Sources: Bloomberg, Dow Jones

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