* CKI makes non-binding proposal at 465 pence/share
* Northumbrian shareholders to get final dividend of 9.57 pence
* Northumbrian to grant CKI time for due diligence
* CKI to sell Cambridge Water before announcing a firm offer
* Northumbrian shares up 4.7 percent at 446.3 pence (Adds CKI, analyst comment, detail, updates shares)
By Adveith Nair and Alison Leung
LONDON/HONG KONG, July 11 Northumbrian Water is to open its books to a group owned by Li Ka-shing, Hong Kong's richest man, who has made a takeover approach that could value the British water utility at 2.4 billion pounds ($3.9 billion).
Northumbrian said on Monday Cheung Kong Infrastructure Holdings (CKI) had made a proposal of 465 pence per share, a 21 percent premium to Northumbrian's share price before reports of a takeover surfaced last month.
Shareholders will also receive a net final dividend of 9.57 pence. Analysts had expected CKI to pay 450-500 pence.
"The current bid level including the final dividend is 475 pence per share, and we regard this as fair, and likely to be recommended by the board," Investec analyst Angelos Anastasiou said, adding the company's largest shareholder, the Ontario Teachers' Pension Plan, would likely be happy with the offer.
"The in-price for Ontario Teachers' Pension Plan for most of its 27 percent stake is just 198 pence per share," he said.
A CKI spokeswoman said Monday's announcement that Northumbrian was to open its book was the "first step," adding due diligence would be started right away.
Northumbrian shares were up 4.7 percent at 446.3 pence at 0900 GMT.
"There is a chance they do due diligence, and say 'We are not going to bid at this level' and walk away," Anastasiou said, pointing to the share price, adding: "There is not a firm bid yet and something could crop up regulatory-wise that might cause it to be blocked (but) I think that is unlikely".
CKI TO SELL CAMBRIDGE WATER
Britain, open to foreign ownership of infrastructure assets, has proved a popular investment destination for the octogenarian Li, who has bought into regulated utility assets in the past.
CKI has already invested in two unlisted British water companies - it owns Cambridge Water and has a 4.75 percent stake in Southern Water. It has agreed to sell Cambridge Water prior to announcing a firm bid offer for Northumbrian.
Cambridge Water has a regulatory capital value (RCV) of 57 million pounds, while Northumbrian Water has a group RCV of 3.6 billion.
"CKI said they would sell Cambridge Water before the final bid and that might take a little while," Liberum Capital analyst Dominic Nash said.
Anastasiou at Investec said CKI might already have been approached by potential bidders for Cambridge Water. "It is probably not something they are just starting now." ($1 = 0.622 pound) (Writing by Adveith Nair; Editing by Dan Lalor)