Both the Daily Mail and the Daily Telegraph are reporting that National Grid, the largest utility company in the United Kingdom is among the suitors for Empire:
National Grid, which brings in a stonking dividend yield of 4.8 per cent, rose 7.6p to 925.4p amid whispers that the UK’s largest listed utility has a major acquisition in the pipeline.
Dealers heard that the London-based multi-utility is one of three groups interested in acquiring Empire District Electric Company, an investor-owned utility providing electric, natural gas and water services with 215,000 customers in the US. It hoisted the ‘For Sale’ sign three months ago and word has it that an agreed deal is now close.
Empire’s shares trade around $27 and speculation suggests the take-out price could be in the region of $35 a share.
The news that Empire District Electric was for sale was first announced in December, when company officials said they were exploring "strategic alternatives."
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I have been wondering why a British utility would have an interest in Empire and then the recently announced Johnson Controls deal made it click.
ReplyDeleteTax Inversion!
Enpire has been reporting very high profits and thus tax liabilities. If Empire sold to a British company they would no longer (or at least less) be subject to state and federal taxes in the US. National Grid has a history of "aggressive international tax arbitrage" https://www.bostonglobe.com/business/2014/06/23/tax-board-sides-with-state-national-grid-dispute/B9XrMh2rn78AW5swr3ugYM/story.html
If their future tax liabilities will be lower they can afford to pay more than a US firm.
Not only will valuable jobs and tax revenue leave this community they will leave the entire country.