Following the acquisition of Bournemouth Water by Pennon Group plc, the Competition and Markets Authority has consented to the provision of general corporate and group services by Pennon for the Bournemouth Water business.
During the specified period i.e. until the date the CMA reaches its final decision on the merger, the Authority is allowing Pennon to provide the following services:
- Banking changes, pooling surplus cash, new debt raising.
- Dealing with tax, VAT, PAYE, groupings consideration.
- Insurance.
- Group disclosure items: Carbon Reduction Commitment, Energy Savings Opportunity Scheme.
- Legal functions: debt collection and criminal prosecutions.
The consent has been granted on the basis that the recipients of the information provide confidentiality undertakings to Bournemouth Water and on the basis that, should the merger be prohibited, any records or copies, electronic or otherwise, will be returned to the business to which they relate and any copies destroyed.
Among other arrangements now being put in place, the CMA has also agreed to certain employees, which need to be appointed by Pennon, liaising and negotiating guarantees and pension arrangements with the seller and third parties to allow compliance with the Sale and Purchase Agreement requirements.
Phase 1 of the CMA’s inquiry into the acquisition began on 22nd April – the CMA is now considering, whether a relevant merger situation has been created and whether it has either resulted or could be expected to result in a substantial lessening of competition within the market. Deadline to respond to the invitation to comment on Phase 1 is 7 May 2015.
Deadlines for a phase 1 decision by the Authority and the launch of a merger inquiry have yet to be confirmed.
With regard to the management of the Pennon and Bournemouth Water businesses, Pennon must ensure that the Bournemouth Water business is carried on separately from the Pennon business and the Bournemouth Water business’s separate sales or brand identity is maintained. The Bournemouth Water business and the Pennon business must also be maintained as a going concern and sufficient resources made available for the development of both the Bournemouth Water business and the Pennon business on the basis of their respective pre-merger business plans.
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