A consortium led by Hong Kong tycoon Li Ka-shing's Cheung Kong Infrastructure Holdings (CKI) <1038.HK> agreed to buy British utility Northumbrian Water Group for 2.41 billion pounds ($3.92 billion) in what could be the biggest takeover this year of a British-listed company.

Li has been expanding his business empire by buying into regulated infrastructure and utilities assets in developed countries, especially Britain -- which is open to foreign ownership of its infrastructure assets.

It's in line with their practices and what they are comfortable with. In terms of consistency to their strategy, it appears to be fine to me. Relative to similar sort of deals, the (acquisition) premium is also within that range, said Lorraine Tan, analyst at Standard & Poor's Equity Research (Asia).

I think it is a fair deal. I think the bottom line impact to CKI holdings won't be as much, as large as the UK power networks deal. I wouldn't expect the same sort of uptick to its share price that we saw with that particular deal, Tan added.

Last year, CKI and Li's other investment arm, Power Asset Holdings <0006.HK>, agreed to buy the British electricity distribution networks of France's EDF , which provide power to London and southeast Britain, for 5.8 billion pounds.

CKI said the consortium is offering to acquire Northumbrian at 465 pence per share. Northumbrian shares, which closed at 449.4 pence on Monday, jumped more than 4 percent on the news.

CKI has already invested in two unlisted British water companies. It owns Cambridge Water and has a 4.75 percent stake in Southern Water, according to the company's website.

Northumbrian Water is one of the 10 regulated water and sewerage businesses in England and Wales.


Li is widely known for his savvy deal making, which earned him the nickname of superman in local media.

A high-school drop out, the spry, bespectacled Li went on to build a plastic flower business into a global empire with 26,000 employees in 55 countries.

The directors of Northumbrian Water have confirmed that they intend to recommend unanimously that Northumbrian Water shareholders vote in favor of the scheme, CKI said in a statement.

Ontario Teachers' Pension Plan Board, which has a 26.8 percent stake in Northumbrian Water, plans to back the acquisition proposal, it added.

Shares of CKI rose nearly four percent to a record intraday high on the news.

The consortium, called UK Water, is indirectly wholly owned by CKI, Li Ka-shing's Cheung Kong Holdings <0001.HK> and Li Ka Shing Foundation Ltd (LKSFL), a charitable foundation established by Li.

CKI and CKH each holds a 40 percent stake in UK Water, with LKSFL holding the remaining 20 percent.

CKI is controlled by Li's ports-to-telecoms conglomerate Hutchison Whampoa Ltd <0013.HK>, which in turn is controlled by Cheung Kong Holdings.

CKI said it would contribute 879.5 million pounds to the Northumbrian acquisition, to be funded with internal resources and a bridge loan of 600 million pounds.

The Northumbrian deal carries a break fee of 24.1 million pounds for Northumbrian, the statement said.

For the year ended March 31, Northumbrian Water reported net profit after taxation and extraordinary items of 178.4 million pounds, versus 122.9 million pounds the previous year.

Net assets of Northumbrian Water as at March 31 were 475.9 million pounds, up from 313.9 million pounds a year earlier.

($1 = 0.615 British Pounds)

(Writing by Charlie Zhu; Editing by Vinu Pilakkott)