Pennon Regulatory News (PNN)

PENNON GROUP

7 March 2022

CMA clears Bristol Water merger with South West Water

The CMA has today published its clearance of the merger of Bristol Water with South West Water, following the acquisition announced in June 2021.

Pennon Group plc is pleased that the undertakings proposed, which will maintain separate price controls for the Bristol Water region within a merged water business[1], have now been accepted.

We will continue to work collaboratively with Ofwat throughout the next steps of the process as we seek to combine South West Water and Bristol Water into one licence and business entity.

The combined entity will 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.

Susan Davy, Pennon Group CEO, said:

"The merger of Bristol Water with South West Water is all about bringing together the best of the best to deliver for our customers, communities, and the environment in the Greater South West.

We have a track record of delivery and are working across both businesses to deploy our proven integration strategy, which we are confident will deliver meaningful benefits for all stakeholders.

Alongside this, we are excited to further evolve our WaterShare+ unique customer share ownership scheme, offering Bristol Water customers a greater stake and say in the business."

The CMA's press release can be viewed here.

Further information will be provided in Pennon's trading update for the year ending 31 March 2022 which will now be published on 12 April 2022, alongside a spotlight presentation followed by a live Q&A conference call, hosted by Susan Davy and Paul Boote.

Please register here: https://www.pennon-group.co.uk/investor-information 

Conference call dial in details:

United Kingdom: 020 3936 2999

All other locations: +44 20 3936 2999

Passcode: 527378 

Background

Pennon's acquisition of Bristol Water Holdings UK Limited completed on 2 June 2021 and in line with standard procedure, was referred to the CMA for review under the Water Industry Act 1991.

In December 2021, Pennon proposed undertakings in lieu of a Phase 2 investigation which have now been accepted by the CMA.

The £425 million acquisition reflects c.16% growth in Regulatory Capital Value.

The Non-Household element of the acquisition was referred under the provisions of the Enterprise Act 2002 and was unconditionally cleared on 5 November 2021.

About Pennon

Pennon is a UK-focused water infrastructure group, comprising South West Water (incorporating Bournemouth Water), Bristol Water, and Pennon Water Services.

Bristol Water is a regulated water only company supplying drinking water to a population of approximately 1.2 million people in the Bristol region.

South West Water provides water and wastewater service to a population of c.1.8 million in Cornwall, Devon and parts of Dorset and Somerset, and water only services to c.0.5 million in parts of Dorset, Hampshire and Wiltshire.