£15bn UK Power Networks takeover ‘collapses over price increase’

The £15 billion takeover of the UK’s biggest electricity distributor has collapsed, according to reports.

A consortium led by private equity giant KKR and Australia Macquarie had struck a deal to buy UK Power Networks from Hong Kong’s CK Infrastructure Holdings (CKI).

The Financial Times has now reported that the deal has now failed after CKI, which owned by billionaire tycoon, tried to increase the price of UK Power Networks, shortly before the agreement was due to be formally signed, due to rising inflation.

However, the consortium, made of six groups, pushed back and pulled out of the takeover move as a result.

CKI originally purchasing the electricity network business in 2010 for around £5.5 billion.

It is the largest electricity distribution operator in UK, covering around 8.3 million homes and businesses, primarily in the south east and East Anglia.

People close to the deal told the publication that the sharp rise in UK inflation and currency movements led to the change in price.

Last month, the Office for National Statistics (ONS) revealed that UK CPI inflation increased to a new 40-year high of 9.1%, with predictions that it could rise by as much as 11% later this year.

Electricity networks are among privatised infrastructure assets in the UK which can benefit from rising inflation as returns are set by regulators and directly linked to CPI or RPI inflation measures.

Retail Price Index (RPI) inflation, which is an older measure but still used for some pricing, hit 11.7% in May.

UK Power Networks and CK Infrastructure Holdings have been contacted for comment.