National Grid Sells U.K. Gas Transmission at a Price Above Our Estimate; FVE Upped to GBX 950

We tweak our fair value estimate to GBX 950 from GBX 920 per share after no-moat National Grid announced the sale of 60% of its U.K. gas transmission assets to a consortium formed by Macquarie and British Columbia Investment Management Corporation at a price above our estimate. This should enable the company to avoid a dividend cut, unlike what we expected. That said, the tepid share price reaction shows that the high premium was largely priced in. The transaction is expected to be completed in the second half of calendar year 2022 upon clearing from the antitrust, in line with previous guidance. Shares appear overvalued.