Skip to comments.1998 : Merger mania continues
Posted on 07/24/2007 3:11:33 PM PDT by dakine
Merger mania seeped into international waters on this day in 1998, as Enron Corporation inked a lavish deal to acquire British-based Wessex Water, PLC. For the sum of $2.2 billion--which was reportedly paid in cash--Enron, an electricity and gas titan from Houston, Texas, made a splashy entrance on to world water utility stage. According to company officials, the deal signaled Enron's first move towards creating a global water subsidiary; Wessex Water was slated to be the crowning jewel of the new concern, which would focus on developing water distribution systems and treatment plants in Asia, Europe and Latin America. In the wake of the deal, Enron's eyes were clearly fixed on a handsome payday in the not-too distant future. As company chief Kenneth Lay noted, the "worldwide water market" was quite lucrative (company figures pegged the field's worth at $300 billion), but sparsely populated; the situation presented "tremendous opportunities for future growth as the...industry moved toward privatization and consolidation." Gazing into his crystal ball, Lay predicted that the acquisition of Wessex would swiftly push the subsidiary to the point where no longer relied on Enron's coffers to maintain its daily operations.
Questionable accounting practices and corporate fraud caused Enron's stock to plummet, leading to Chapter 11 bankruptcy protection in 2001. Enrons CEO, Kenneth Lay, was indicted by a federal grand jury in 2004; his trial began in January 2006. On May 25, 2006, Lay was convicted of conspiracy and fraud.