Terra Firma withdraws East Surrey offer

Following a dispute with the Northern Ireland energy regulator, Terra Firma has applied to the Takeover Panel to withdraw its £453m offer for the UK water and gas utility.

London-headquartered Terra Firma Capital Partners is set to pull out from the process of acquiring UK water and gas utility East Surrey Holdings plc that began in April this year when it agreed the terms of a £453 million (€660 million; $850 million) recommended offer for the company.

The firm has applied to the Takeover Panel to allow its bid for the utility to lapse on the basis that one of the regulatory conditions set out in the offer document had not been satisfied.

A source close to the firm confirmed that one of the offer conditions was that the energy regulator in Northern Ireland wouldn’t seek to alter the regulatory framework for Phoenix Natural Gas, the distribution arm that makes up around half of East Surrey’s business.

The Northern Ireland Authority for Energy Regulation had indicated over the summer that it might reconsider the regulatory framework for Phoenix in light of Terra Firma’s proposed acquisition, which has led to today’s application.

Now that the application by Terra Firma has been made, the Takeover Panel has to give its approval to the request. No timetable for dealing with the application has been set.

East Surrey shares were down almost 9 percent at 445 pence, valuing the company at £382 million at 07.30 GMT this morning, according to Reuters.

Citigroup and Gleacher Shacklock are advising Terra Firma and Hawkpoint are providing financial advice to East Surrey Holdings.