Business Weekly - Cambridge, UK

Bream Investments, the takeover vehicle backed by WestLB has been ordered to table an official bid by the June deadline or relinquish its aspirations of ownership of the utilities and infrastructure management group for at least six months.

AWG has welcomed the ‘put up or shut up’ ultimatum. Chairman Peter Hickson, announcing AWG’s year-end results to March 31, said: “Recent publicity concerning WestLB has raised questions about its position.

“Accordingly, the board has written to the chairman of WestLB requesting that they clarify their intentions or withdraw.

“Subsequently, the Takeover Panel announced that WestLB must make an offer by June 18 or withdraw.

“AWG’s advisers have met WestLB’s financial advisers to discuss value, but no indication of a higher offer has been forthcoming.

“There have also been meetings between AWG’s lawyers and WestLB’s lawyers. Whilst there has been some progress in relation to the regulatory issues, there is still no assurance that WestLB could complete an offer.”

WestLB’s ability to complete the transaction is surrounded by a number of question marks, not least of which is its ownership of Mid Kent Water.

Any bid for AWG would be referred to the Competition Commission if WestLB owned another water company, while its attempts to divest itself of Mid Kent have floundered to date.

AWG has already rejected two bids since January – one of 510p and another within a range of 520p and 545p.

The group also announced its intention to continue to undermine appetite for the bid among its investors by maintaining a programme which has seen £759m paid to shareholders over the last year.

A company statement read: “AWG remains committed to its policy of increasing its annual payments per share to shareholders in line with inflation until at least March 2005.”

Profit before tax, exceptional items and goodwill amortisation decreased to £106m from £137.3m in the previous year on turnover up 3.8 per cent to £1.9bn.

Since the year-end, a joint venture has been established between AWG and Capital and Regional Plc to acquire one of Developments and Commercial Service’s assets, Great Northern Warehouse and this generated cash to AWG of £55m.

The company’s attempts to dispose of its international business have not yet come to fruition.

AWG announced: “During the year the group announced its decision to dispose of the international business.

“The early indications of interest have not developed into firm offers and the sale process has fallen behind the timetable originally envisaged.

“The board has taken steps to reinvigorate the process and changed the management and advisory teams handling the disposal.”