United Utilities to sell Thus stake
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United Utilities continued its sell-off spree as the water company sold its majority stake in Thus, the alternative telecommunications provider, for £80m.
The share placing came
a week after United
Utilities said that it
would dispose of its electricity distribution operation. Earlier in the year it sold Vertex, its outsourcing business.
It was the disposal
of United Utilities own
telecoms business that brought it the stake in
Thus through a paper deal worth about £59m in February 2006 that gave Thus ownership of Your Communications.
The market capitalisation of Thus currently about £360m is considerably smaller than the likely price tag of more than £1bn for United Utilities’ power assets, which remain on the block.
The sale of the stake in Thus had been on the cards for some time. The lock-up period expired in February and the prospect of a sale has dragged on Thus’s share price.
The share sale comes as Thus’s trading position appears to be improving. The company has said it is set to make an operating profit in the current year. Last year’s operating loss was £9.5m.
United Utilities, along with some of its peers such as Severn Trent, has been slimming down and returning to its original core business of water supply.
The placing of more than 41.4m shares with institutional investors was conducted by Citi and HSBC at 183p.
Shares in United Utilities closed unchanged at 767½p, while Thus closed down 11½p at 185½p.
FT Comment
● It was always on the cards that United Utilities would sell its stake once the lock-up period expired, given that it had long signalled its intent to focus on waste. With Thus trading near a three-year high, it was also a propitious moment. The deal looks set to have the greater impact on Thus and now the share overhang is gone, its share price remains buoyed by speculation of a merger between it and Kingston Communications. Yesterday’s news, together with Hull Council’s recent sale of its 30 per cent stake in Kingston, is unlikely to damp the talk.
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