pounds 20m bid for Chester Water

Dee Valley Water yesterday launched an agreed pounds 20m takeover bid for Chester Water, a move that will result in a 3.5 per cent reduction in bills for customers of both companies.

The terms of the offer are 403 new Dee Valley shares for every 1,000 Chester Water shares. Dee's shares held steady at 395p, valuing each Chester share at 169.26p. Chester's shares closed at 162.5p, up 8.5p. Chester shares were valued at 169.26p each, excluding the interim dividend of 2.55p, which Chester shareholders will retain.

There is an alternative offer of cash and shares for Chester's investors, who will also keep the recently announced 2.55p interim dividend. They can elect to receive 282 new Dee Valley shares together with either a cash payment or a special dividend of pounds 508.20 for every 1,000 Chester shares.

Dee Valley has received undertakings to accept the offer from Chester shareholders representing around 65.7 per cent of the company's equity.

The companies have agreed with the Office of Water Services that from 1 April 2001, bills for customers of both Dee Valley Water and Chester Water will be reduced by 3.5 per cent over and above the combined existing `K' pricing factors.

Brian Jenkins, chairman of Dee Valley, said: "The enlarged group will generate cost savings to benefit our customers and shareholders." The 3.5 per cent reduction in price limits is over and above existing price limits.