AWG receives 900m offer from Saunders
By Robert Peston

Robin Saunders, the flamboyant financier who runs WestLB's substantial buyout business, has made a 900m bid approach for AWG, owner of Anglian Water.

In a frenetic week for Saunders, WestLB has also just won Odeon cinemas with a 450m bid.

Saunders is being advised by John Reynolds, of Houlihan Lokey Howard & Zukin, a US financial restructuring specialist, and has put together a team to run AWG.

One member is Francis Gugen, the former managing director of Amerada Hess, the oil company. At one stage he was expected to run AWG's water businesses as part of a demerger plan considered a couple of years ago.

Saunders also told AWG that she is being backed by Gordon Morrison. This adds a frisson to her offer. Morrison is the brother of Sir Fraser Morrison, from whom AWG is seeking 130m in damages relating to its takeover in 2000 of the Morrison construction group.

Last week AWG began a high court action against Sir Fraser and Stephen McBrierty, Morrison's former chief operating officer, alleging they "made knowingly false representations to Morrison's board of directors and auditors concerning the accounts to March 2000".

AWG says it bought Morrison on the strength of a company forecast that it expected to make pre-tax profits of 30.5m in the year to March 31, 2001. It incurred a 46.4m loss.

Saunders approached Peter Hickson, AWG's new chairman, with a tentative offer of about 510p a share a week ago. However, she put nothing in writing and Hickson told her his board needed more detailed information before it could decide whether to support a bid.

Hickson is understood not to be hostile to a bid in principle. However, he may feel that 510p undervalues the company, since some brokers have a target price of 650p. He has been meeting shareholders to assure them his priority is to lift the share price.

An obstacle to a WestLB offer is its ownership of Mid Kent Water. This means that any offer for AWG would almost certainly be scrutinised by the Competition Commission. Saunders is confident that "Mid Kent will not be a problem," according to an executive who knows her well.

Saunders is one of the most ambitious buyout specialists operating in the UK. A couple of years ago, she tried to persuade BT to sell her its telecommunications network. She also put together the financing package for the redevelopment of Wembley Stadium.