Singapore’s Sembcorp Industries (SCIL.SI) said it will pay around US$206 million ($282 million) for New York-listed Cascal NV (HOO.N) to boost its global water and wastewater capacity by 50%.

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 US$6.75 a share if it acquires 80% of Cascal’s outstanding shares, a discount of 11% from Cascal’s last traded price of US$7.60, it said in a statement. 

 

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

 

“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% 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% 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. 

 

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