Greece may merge its two largest water utilities, Athens Water Supply & Sewage Co. and Thessaloniki Water Supply & Sewage Co., after efforts to sell controlling stakes were stymied by legal obstacles and local opposition.
Combining Athens Water and smaller Thessaloniki Water would create a company with a market value of almost $1.4 billion that’s able to attract capital and carry out larger investments, a government official said on Friday. The official asked not to be named as no final decision has been made.
The move follows a Greek constitutional court ruling in May that canceled the transfer of the government’s stake in Athens Water to the Hellenic Republic Asset Development Fund, deeming it “against the constitution.” An unofficial referendum in Thessaloniki and 10 metropolitan municipalities on May 18 opposing the sale of Thessaloniki Water forced the country’s privatization fund to review sale plans.
The Greek state is the biggest shareholder in both water companies, according to data compiled by Bloomberg. Paulson & Co. bought a 9.9 percent stake in Athens Water in May. Athens Water has a market value of 914 million euros ($1.2 billion), and Thessaloniki Water almost 152 million euros.
Merging the bigger Athens utility with Thessaloniki would create synergies and is part of the government’s plan for managing water supply and infrastructure in Greece, the official said. Athens Water’s know-how and personnel will help Thessaloniki Water carry out infrastructure projects, the official said.
The Athens utility was almost unchanged at 8.58 euros at 12:44 p.m. today in Greek trading, having risen 11 percent this year, while Thessaloniki’s shares were 1.5 percent higher, its biggest intraday gain in a week.