WESTERN POWER Distribution is to sell Welsh Water to Glas Cymru, a not for profit company, for £1.8bn, it was announced on Friday.
WPD paid £2.4bn for water and electricity group Hyder this summer (NCE 24 August).
However, the deal could be superseded by a rumoured counter-offer from the Japanese bank Nomura.
A spokesman for WPD said that it was bound to consider any bid received, but 'the deal with Glas Cymru was announced, and that's it. . . The Glas Cymru bid is good for WPD, good for Welsh Water, and good for the people of Wales.'
Glas Cymru has promised to lower customer bills and is seeking early regulatory approval so the deal can go through by the end of the year.
Glas Cymru will be run as a non-profit making organisation with no shareholders and day to day water infrastructure operation will be outsourced. Executive director Nigel Annett claimed outsourcing would enable it to reduce borrowings by £20M a year. This would allow the company to cut water charges.
The Royal Bank of Scotland and Citibank will provide initial finance to cover the £1.1bn debt that the company will inherit, with the remaining £700M raised from bonds to be issued next year.