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National Grid sells majority stake in gas division in £13.8bn deal National Grid sells majority stake in gas division in £13.8bn deal
(35 minutes later)
National Grid has agreed to sell a majority stake in its gas pipe network to a team of investors in a deal valuing the division at about £13.8bn.National Grid has agreed to sell a majority stake in its gas pipe network to a team of investors in a deal valuing the division at about £13.8bn.
The UK’s power network operator said it will sell a 61% shareholding in the gas pipe arm to a consortium led by Australian investment bank Macquarie, including backing from Qatari and Chinese state investors. The UK’s power network operator said it would sell a 61% shareholding in the gas pipe arm to a consortium led by Australian investment bank Macquarie, including backing from Qatari and Chinese state investors.
National Grid will return £4bn to shareholders after the deal, while it will also make a voluntary payment of £150m to the benefit of British energy consumers. National Grid will return £4bn to shareholders after the deal, and it will make a voluntary payment of £150m to the benefit of British energy consumers.
The auction for the gas network has been running for at least a year and saw the Macquarie consortium fight off a raft of competitors, including a team led by Chinese investors. The auction for the gas network has been running for at least a year, and the Macquarie consortium fought off a raft of competitors including a team led by Chinese investors.
National Grid will receive 3.6 billion cash for the stake in its gas arm, as well as a further £1.8bn in debt financing. National Grid will receive £3.6bn cash for the stake in its gas arm, as well as a further £1.8bn in debt financing. It will retain a 31% stake in the business.
It will retain a 31% stake in the business. National Grid said there was the potential for a further 14% stake to be sold to the consortium.
But National Grid said there was the potential for a further 14% stake to be sold to the consortium.
It has been a closely watched sale process, given the foreign interest in the national gas pipe network.It has been a closely watched sale process, given the foreign interest in the national gas pipe network.
John Pettigrew, chief executive of National Grid, said the deal “represents an important milestone in the evolution of National Grid and is a good outcome for our customers, employees, and shareholders”.John Pettigrew, chief executive of National Grid, said the deal “represents an important milestone in the evolution of National Grid and is a good outcome for our customers, employees, and shareholders”.
He added: “The consortium has a long-term commitment to the UK, with significant experience in owning infrastructure assets, and we look forward to working with them as the gas distribution business continues to deliver a safe and reliable service.”He added: “The consortium has a long-term commitment to the UK, with significant experience in owning infrastructure assets, and we look forward to working with them as the gas distribution business continues to deliver a safe and reliable service.”
The sale, which is set to complete before the end of March next year, comes as part of a move to rebalance National Grid’s business towards higher growth areas and create extra value for shareholders.The sale, which is set to complete before the end of March next year, comes as part of a move to rebalance National Grid’s business towards higher growth areas and create extra value for shareholders.
Unison union general secretary Dave Prentis said: “The experience of Thames Water customers when Macquarie was running the show should have been a red flag to ministers and regulators as how unsuitable this company is to be in charge of the UK’s gas supply. Unison’s general secretary, Dave Prentis, said: “The experience of Thames Water customers when Macquarie was running the show should have been a red flag to ministers and regulators as how unsuitable this company is to be in charge of the UK’s gas supply.
“Macquarie has poor form already – in building up huge company debt, repatriating massive dividends to the southern hemisphere and charging customers more for a much poorer service. “Macquarie has poor form already – in building up huge company debt, repatriating massive dividends to the southern hemisphere and charging customers more for a much poorer service. The company has already proved it can’t be trusted with the nation’s water supply, but now it is to be in charge of gas pipes to millions of homes and businesses.”
“The company has already proved it can’t be trusted with the nation’s water supply, but now it is to be in charge of gas pipes to millions of homes and businesses. He added: “The government has said it wants to invest in UK infrastructure, yet these are not terribly encouraging first steps. It suggests ministers have not given much thought to an industrial strategy, not do they seem to have much desire to retain key parts of the nation’s infrastructure in UK hands.”
“The government has said it wants to invest in UK infrastructure, yet these are not terribly encouraging first steps. It suggests ministers have not given much thought to an industrial strategy, not do they seem to have much desire to retain key parts of the nation’s infrastructure in UK hands.” National Grid has 82,000 miles (132,000km) of pipeline, which delivers gas to about 11 million households and businesses.
National Grid has 82,000 miles (131,966km) of pipeline, which delivers gas to about 11 million households and businesses.
The gas arm employs nearly 5,700 staff.The gas arm employs nearly 5,700 staff.