Pennon Group approached for takeover bid for South West Water

Abu Dhabi Investment Authority is reportedly considering a bid for Pennon Group's South West Water.

The sovereign wealth fund is said to be preparing a cash bid of up to 775p a share for the group, according to the Daily Mail on Wednesday.

Pennon's underperforming waste water management business Viridor would also eventually be sold, according to the reports.

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Viridor issued a shock profit warning in November, saying full-year profits would be below market expectations and some 30% lower than the previous year due to falling prices for recycled materials known as recyclate.

In contrast, South West Water has performed strongly with earnings up 6.6% year-on-year.

A spokesperson for Pennon declined to comment on reports of a possible takeover when contacted by Sharecast.

Shares rose 2.72% to 642p at 10:19 at Wednesday.

RD