Severn Trent today rejected a foreign consortium’s second takeover bid, this time worth £5.1 billion, saying that its board had “unanimously concluded” the offer failed to “recognise its future potential”.
The consortium, which has named itself LongRiver, is led by Canada’s Borealis, and includes the Kuwait Investment Office and British pension group the Universities Superannuation Scheme. It tabled an offer last month before coming back with the higher price just after Trent’s annual results last week.
However, Trent said the latest offer of 2125p per share (excluding the 45.51p final dividend the water firm announced last week) represented a premium of only 16 per cent to the utility’s unaffected share price. Stripping out the dividend, the deal is worth £4.96 billion.
Trent also set up its stand for independence, saying its share price had increased by 50 per cent in three years, it had invested £11.2 billion in infrastructure, and its regulated capital value — the figure industry regulator Ofwat uses to work out the worth of the utility — is set to hit £8 billion by 2015.
Severn Trent shares settled up 2.6p at 2054.6p, suggesting the City does not expect another bid to emerge. LongRiver has a “put up or shut up” deadline of June 11 to come back with a new offer.
Chairman Andrew Duff said: “LongRiver’s revised proposal fails to value the attractions of Severn Trent’s rare combination of yield, inflation-linked business model and potential.”