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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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
-
Which investment trusts could benefit from lower interest rates?As vehicles for long-term investments, many investment trusts were hit when interest rates rose in 2022. With interest rates expected to fall by the end of the year, could now be the time to invest in one of these unloved sectors?
-
How to protect your personal and financial data from cyber attacksM&S and the Co-op are the latest retailers to suffer from cyber hacks but consumers also need to be vigilant
-
If you'd invested in: Victrex and Pennon GroupFeatures Victrex, which manufactures high-performance plastic, has seen it share price soar, while water utility and waste-management firm Pennon group's shares have plunged.
-
Shares in focus: Water stocks offer no safe harbourFeatures Utilities are popular with nervy investors – but you can overpay for safety, says Phil Oakley.
