Li Ka-shing Companies Bid $9.1 Billion for EDF's U.K. Unit
Li Ka-shing also controls Canadian oil producer Husky Energy Inc., which is developing gas fields in the South China Sea with Cnooc Ltd. Photographer: Jerome Favre/Bloomberg
EDF, Europe’s biggest power generator, reported a 47 percent drop in first-half profit after making a provision on nuclear development in the U.S. because of financing delays. Photographer: Jason Alden/Bloomberg
A group led by Li Ka-shing’s Cheung Kong Infrastructure Holdings Ltd. offered 5.8 billion pounds ($9.1 billion) for Electricite de France SA’s U.K. power networks, the Hong Kong billionaire’s biggest acquisition.
The group includes Cheung Kong unit Hongkong Electric Holdings Ltd. and the Li Ka-shing Foundation, according to a filing to the Hong Kong stock exchange today. The offer is subject to approval by the seller and European Union regulators.
“We’re confident the deal will go through,” Cheung Kong Infrastructure Deputy Chairman Edmond Ip said at a media briefing in Hong Kong today, adding that it would be funded by about 60 percent debt and 40 percent equity. The bid is the biggest by a company controlled by Li, said Ip.
The deal joins investments by Asia’s second-richest man in gas, water and road assets in Australia, Canada and the U.K. to counter price curbs in Hong Kong’s power market. About two- thirds of Cheung Kong Infrastructure’s revenue came from its businesses outside Hong Kong last year. Hongkong Electric has assets in countries including China, Thailand and New Zealand.
“The companies have a history of investing in countries like the U.K. and Australia because their electricity businesses are well regulated and offer stable returns,” said Peter Yao, an analyst at Bank of China Group Investment in Hong Kong. “The market was expecting a price of about 5 billion pounds, but this will be well received because it will produce strong earnings.”
Australia accounted for about 25 percent of Cheung Kong Infrastructure’s total revenue last year, mainland China 16 percent and the U.K. about 13 percent.
Shares Rise
Cheung Kong Infrastructure, which runs power plants and toll roads, rose 0.7 percent to close at HK$29.10. The stock earlier climbed as much as 4.8 percent, the most in 8 1/2 months. Hongkong Electric advanced 0.6 percent to HK$47.05, while the Hang Seng Index fell 0.3 percent.
EDF, Europe’s biggest power generator, reported a 47 percent drop in first-half profit after making a provision on nuclear development in the U.S. because of financing delays. Chief Executive Officer Henri Proglio decided to sell the grid to reduce debt after the company borrowed to expand power generation in the U.S. and U.K.
Paris-based EDF got at least two preliminary bids from the Hong Kong company and a group led by Australia’s Macquarie Group Ltd., a person familiar with the matter said July 16. Deutsche Bank AG and Barclays Plc were advising EDF on the sale. Cheung Kong Infrastructure was advised by RBS Corporate Finance, a unit of Royal Bank of Scotland Group Plc.
Overseas Business
The company’s assets overseas include a stake in the U.K. energy company Northern Gas Networks Ltd. In April, the company agreed to pay 211.7 million pounds for a stake in the U.K. electricity producer Seabank Power Ltd. from BG Group Plc.
Cheung Kong Infrastructure yesterday reported a 48 percent drop in first-half net income to HK$2.03 billion after making a one-off gain last year selling assets. Hongkong Electric’s profit rose 3.2 percent to HK$2.75 billion in the same period.
Li, 82, dubbed “Superman” by Hong Kong’s media because of his track record for investing, was born in Chaozhou in the southern Chinese province of Guangdong. The plastics company he started in 1950 spawned an empire spanning 54 countries, with investments in everything from oil drilling to port operations.
Starting in the late 1950s, Li bought assets including real estate during crises such as the 1967 riots in Hong Kong and the 1989 Tiananmen Square crackdown in Beijing. Forbes magazine listed Li as the world’s 14th-richest person in March, compared with 16th a year earlier, after his wealth increased 30 percent to $21 billion.
Li’s Empire
Li’s Cheung Kong Holdings Ltd. has a market value of $28 billion, making it the world’s largest real estate developer after Sun Hung Kai Properties Ltd, also based in Hong Kong, according to Bloomberg data. The billionaire also controls Canadian oil producer Husky Energy Inc., which is developing gas fields in the South China Sea with Cnooc Ltd.
EDF’s U.K. network serves about 7.8 million people in London and southeast England. It includes about 170,000 kilometers (105,633 miles) of underground cables and overhead power lines, as well as 66,300 substations, according to the company’s website. EDF valued the regulated part of network at about 4 billion euros ($5.1 billion) at the end of 2008.
To contact the reporter on this story: John Duce in Hong Kong at Jduce1@bloomberg.net
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