RWE is considering buying water company

After a spending spree in the last two years that has cost the company GBP14 billion, the company is eyeing one final acquisition before a hiatus to consolidate other recent purchases. RWE plans to add Gelsenwasser to its burgeoning water company portfolio.

Gelsenwasser presents an excellent opportunity for RWE to build up its water business in Germany.

RWE has already acquired Thames Water in the UK, and is in the process of acquiring American Water Works in the US. At present, RWE is the third-largest player in the global water market.

Gelsenwasser is valued at between GBP500 million and GBP563 million, and is likely to be the last in a line of recent major acquisitions, with RWE needing to consolidate its recent purchases.

In addition, it has to sell off the non-core industrial assets that continue to be a burden on the company, so that it can focus on its core multi-utility businesses of electricity, natural gas, water and waste management.

Collectively, the core business units reported a 23% increase in operating profit for the first half of 2002, while there was a 46% decline in operating profits for the non-core businesses. The purchase of Gelenwasser will help the company shift that focus towards core services.