Water boss leaves ahead of merger

Managing director Mr Baggs parted company with the Haywards Heath-based firm on Friday after just four months in the post.

Infrastructure funds Hastings and the Utilities Trust of Australia (UTA) want to merge South East Water with Mid Kent Water which they bought in February last year.

Hastings and UTA have already put Mid Kent's former managing director Paul Butler in charge at South East Water - despite a question mark hanging over the deal.

The merger of the two businesses is subject to a mandatory review by the UK Competition Commission, which is expected to last about six months. Mr Butler has been joined at South East by his former finance director Jo Stimpson and replaced at Mid Kent by his former assets director Paul Seeley.

Yesterday a spokesman for South East Water and Mid Kent Water said they were unaware of the precise circumstances surrounding Mr Baggs' departure.

He replaced long-term predecessor Margaret Devlin in June when water companies were coming under fire for their handling of the drought crisis.

In a statement Hastings managing director Tim Poole said: "We look forward to working with the Competition Commission and other UK regulators to demonstrate the value that our customers will derive from a merger of the two companies."

Hastings' publicly traded unit, Hastings Diversified Utilities Fund, will pay £92 million and unlisted Utilities Trust of Australia will fund the balance.

South East Water supplies drinking water to 1.5 million people, including in Sussex, Surrey and Hampshire, and employs more than 400 people.

It is not yet known whether there will be any job losses following the merger with Snodland-based Mid Kent Water.

The Australian banking group Macquarie, which is selling South East Water, is believed to be in the running to buy Thames Water, alongside private equity group Terra Firma and a consortium featuring the Qatar Investment Office.