UPDATE 1-Sembcorp Indus to buy water firm Cascal for $206 mln

Mon Apr 26, 2010 2:06am EDT

*Offers $6.75/shr if gets 80 pct stake vs current price $7.60

*Boosts Sembcorp's water/wastewater capacity by 50 percent

*Gains access to new mkts such as South Africa, Latin America

(adds details)

SINGAPORE, April 26 (Reuters) - Singapore's Sembcorp Industries (SCIL.SI) said it will pay around $206 million for New York-listed Cascal NV HOO.N to boost its global water and wastewater capacity by 50 percent.

The deal will expand Sembcorp's water and wastewater operations in 11 countries from five and allow it to enter new markets such as South Africa and Latin America.

Sembcorp's utility unit has offered a maximum price $6.75 a share if it acquires 80 percent of Cascal's outstanding shares, a discount of 11 percent from Cascal's last traded price of $7.60, it said in a statement.

The offer stands at $6.40 if it gets less than 80 percent.

"This acquisition will transform Sembcorp into a global water service provider and provide the platform for the group to accelerate our growth in the future," said Tang Kin Fei, group president and chief executive of Sembcorp Industries.

"We will have water and wastewater facilities in 31 operating locations in 11 countries around the world."

The company said its water and wastewater capacity would increase by 50 percent from four million to close to six million cubic metres per day.

Sembcorp Utilities, a wholly owned unit of Sembcorp Industries, has agreed with Biwater Investments, a key shareholder of Cascal to buy a 58.4 percent stake in the firm.

Sembcorp said the acquisition is expected to be accretive to earnings starting from the second year after the deal while transaction costs would be incurred within the first year of acquisition.

Credit Suisse (CSGN.VX) is advising Sembcorp in the transaction. HSBC (HSBA.L) is acting as financial adviser to Biwater. (Reporting by Harry Suhartono, editing by Saeed Azhar and Valerie Lee) ((harry.suhartono@thomsonreuters.com; +65 6403 5658; Reuters Messaging: harry.suhartono.reuters.com@reuters.net) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) ($1=1.370 Singapore Dollar)