Li Ka-shing consortium to buy EDF's UK arm for $9.1 billion

A consortium led by Hong Kong billionaire Li Ka-Shing has agreed to buy the UK electricity networks business of French power group Electricite de France SA (EDF) for £5.8 billion ($9.1 billion).

The consortium comprising Li Ka-Shing' holding company Cheung Kong Infrastructure (CKI), Hongkong Electric, where CKI holds a 39-per cent stake and Li Ka-Shing Foundation outbid UK utility Scottish & Southern Energy and a consortium comprising of Australia's Macquarie Capital, the Abu Dhabi Investment Authority and Canada Pension Plan.

The Li Ka-Shing consortium has offered £5.8 billion, which is about £1.8 billion more than what EDF had expected when it initiated a process in October 2009 of selling its electricity distribution arm in the UK in order to reduce its net financial debt by at least €5 billion by the end of 2010. (See: EDF to cut €4 billion debt with sale of UK electricity distribution business) 

CKI and Hongkong Electric hold an equal stake of 40-per cent stake in the consortium, while Li Ka-Shing Foundation holds the remaining 20 per cent.

The consortium, which said that its offer is open until 26 October 2010, has not revealed how it will finance the deal. CKI had about $1.28 billion cash at hand at the end of June, while Hong Kong Electric, about $606 million.

Cheung Kong Infrastructure and Hongkong Electric said in a joint statement today that EDF has still not accepted its offer, which will depend on its talks with its workers union.