Hong Kong Electric Considering Bid For E.ON's UK Grid Distribution Business

HongKong Electric Holdings Ltd. (0006.HK) is considering a bid for E.ON AG's (EOAN.XE) U.K. electricity grid distribution business, Group Managing Director Tso Kai Sum said Wednesday.

Tso told reporters the power generation unit of tycoon Li Ka-shing is reviewing the bidding documents, though no decision has been made. He declined to elaborate.

People familiar with the situation said earlier HongKong Electric parent Cheung Kong Infrastructure Holdings Ltd., which owns 39% of the firm, is in the running to acquire the German company's assets, along with U.S. energy firm PPL Corp.

In November, HongKong Electric was part of a consortium with Cheung Kong Infrastructure that bought Electricite de France SA's U.K. electricity distribution networks for GBP5.78 billion.

CKI didn't immediately return calls seeking comment on Thursday.

E.ON's U.K. business comprises the U.K.'s second-largest electricity generator and its second-largest distribution network. The distribution business, Central Networks, supplies power to over 5 million customers in central England.

Germany-headquartered E.ON is looking for a premium of around 20% to the U.K. business's so-called regulated asset value, which is set by U.K. energy regulator Ofgem, a person familiar with the situation said earlier. E.ON's U.K. assets have a regulated asset value of about GBP3.1 billion, said another person familiar with the situation.

HongKong Electric is the smaller of Hong Kong's two electricity suppliers. The other firm is CLP Holdings Ltd. The company is in the process of changing its name to Power Assets Holdings Ltd., a move to reflect its increasing focus on investing in power- and utility-related businesses outside of Hong Kong.

-By Hong Kong Bureau, Dow Jones Newswires; 852-2802-7002; djnews.hk@dowjones.com

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