Utilitas and the City of Tallinn acquires shares in AS Tallinna Vesi

Paremalt Utilitase kontserni juht Priit Koit, Tallinna linnapea Mihhail Kõlvart, United Utilities tehingunõustaja Sven Papp. Foto: Raigo Pajula

Today the Tallinn City Government approved an agreement whereby the City of Tallinn and energy group Utilitas will jointly acquire shares held by United Utilities Tallinn B.V. in Tallinna Vesi, the largest water utility company in Estonia providing drinking water and wastewater disposal services in Tallinn and several neighbouring municipalities, on an equal basis at a price of 14.20 euros per share for a total consideration of €100.3 million. As a result of the transaction, the City of Tallinn will become the majority shareholder in AS Tallinna Vesi with 52.35 percent, and the share for Utilitas will be 17.65 percent.

According to Mihhail Kõlvart, the Mayor of Tallinn, it is important that Tallinn restores its strategic position in a company providing vital services. “Tallinna Vesi is an attractive investment for the City as it provides steady long-term returns and additional income. At the same time, it was important for us to involve a strategic partner with significant experience in the highly regulated utilities sector to ensure the development of the company and meet the expectations of all the shareholders as Tallinna Vesi is a listed company. In the coming years, we plan to increase capital spending into the infrastructure of Tallinna Vesi compared to before. Reducing the carbon footprint of our utilities remains a top priority for us, too. We would like to thank our long-term partner United Utilities for its contribution to the development of the company and its well-being,” said Mihhail Kõlvart, the Mayor of Tallinn.

The acquisition requires the approval of the Tallinn City Council and merger clearance from the Estonian Competition Authority. If the respective preconditions are met, the acquisition of shares from United Utilities is expected to be completed in March 2021. Following the receipt of the necessary approvals from the Financial Supervision Authority, the City of Tallinn and Utilitas will jointly undertake a mandatory tender offer in respect of shares held by minority shareholders of AS Tallinna Vesi. Terms of the tender offer shall be announced separately once approved by the Estonian Financial Supervision Authority.

“Thanks to our long-term experience in the utilities sector, we can ensure a high-quality water service for the people of Tallinn in cooperation with the city.  Tallinna Vesi has a professional team, and we also see the joint development and synergy potential in many directions between the water and energy sectors, which will increase the efficiency of both and help the city move towards carbon neutrality,” said Priit Koit, CEO of Utilitas. “Infrastructure service providers in Tallinn have a major role to play in reducing the city’s carbon footprint, and the synchronised development of the two sectors and positive synergies will undoubtedly contribute to this.”

The Supervisory Board of Tallinna Vesi will continue to have nine members, of which four will be held by the City of Tallinn, three by Utilitas and two by independent members. The City of Tallinn and Utilitas have more than twenty years of cooperation in the field of district heating. Utilitas’ majority owner, First Sentier Investors, has extensive international experience in operating infrastructure companies, including water companies, and is an investor in Anglian Water, one of the UK’s largest water companies and MVV Energie, a German energy and water group.

Simon Gardiner, the representative of United Utilities and the Chairman of the Supervisory Board of Tallinna Vesi, said that United Utilities is grateful for the City of Tallinn for its trust and opportunity to be a partner to the City of Tallinn as a water company for more than 20 years. “We have always tried to repay this trust by working hard to improve every aspect of this service for our customers in Tallinn and we believe that the company has truly succeeded at this. While United Utilities has played its part, this would not have been possible without the skill and efforts of the dedicated employees of the company. My special thanks go to them and, in particular, to the management board whose guidance and leadership have been exceptional. We extend our best wishes to the City and Utilitas and we have every confidence that they will build on the company’s successes in the future.”

Superia acted as financial adviser, law firm Triniti as legal adviser to the City and Utilitas, and law firm COBALT acted as legal adviser to Utilitas. United Utilities was advised by EY, Slaughter and May and Ellex.