National Grid set to return £4bn to shareholders after gas distribution deal
Midlands utility National Grid has completed the sale of its majority interest in the UK Gas Distribution business in a move that will see £4bn returned to shareholders.
National Grid has sold its 61% equity interest in National Grid Gas Distribution to a consortium of long-term infrastructure investors.
The consortium comprises Macquarie Infrastructure and Real Assets, Allianz Capital Partners, Hermes Investment Management, CIC Capital Corporation, Qatar Investment Authority, Dalmore Capital and Amber Infrastructure Limited/International Public Partnerships.
National Grid intends to return £4bn of the net proceeds of the sale to shareholders. Approximately £3bn of the proceeds will be returned through a special dividend with a share consolidation, and the remainder by way of a share buyback programme.
The utility company has also announced that it has entered into an agreement with the consortium for the potential sale of a further 14% equity interest in NGGD. The deal could be completed anytime between March 1 2019 and October 31 of the same year.
This would be subject to no less than six months’ prior written notice and the satisfaction of customary regulatory conditions.
The value of the 14% stake has been estimated at around £0.8bn and the transaction would be completed in cash and on broadly similar terms to the sale of the 61% equity interest. If the sale of the further interest is completed, National Grid said it would update at that time how the proceeds would be used.
John Pettigrew, chief executive of National Grid, said: “I’m pleased that we have successfully completed the sale of a majority interest in our UK Gas Distribution business. This was a significant and complex transaction, under a tight timetable, which has delivered a good outcome for our customers, employees, and shareholders.
“This transaction will enable National Grid to continue to build a strong asset portfolio that delivers attractive total shareholder returns, while maintaining a strong balance sheet.”
In conjunction with the transaction, National Grid will make a voluntary distribution of £150m to help energy consumers.
“National Grid takes very seriously the role it plays in people’s daily lives and believes it has a responsibility to ensure that our wider stakeholders also benefit from the sale of NGGD,” it said.
“National Grid wants to ensure that the contribution is used in a way that provides the maximum possible benefit and expects to provide more details about how this will be done in due course.”
The return of the sale proceeds to shareholders will begin as soon as possible following the deal’s completion.
Shareholder approval will be sought for the share consolidation at a general meeting to be held at 9am on Friday May 19, 2017 at the offices of Linklaters, One Silk Street, London EC2Y 8HQ.
Further details about the resolutions to be considered at the meeting will be set out in a circular expected to be published on April 19.
