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Severn Trent rejects takeover approach | Severn Trent rejects takeover approach |
(35 minutes later) | |
Water supplier Severn Trent has rejected a preliminary takeover offer from international investors. | Water supplier Severn Trent has rejected a preliminary takeover offer from international investors. |
In a statement, the company said the proposal "completely fails to recognise the existing and potential value of Severn Trent". | In a statement, the company said the proposal "completely fails to recognise the existing and potential value of Severn Trent". |
It did not reveal details of the offer, but earlier reports suggested it could value the business in excess of £5bn. | It did not reveal details of the offer, but earlier reports suggested it could value the business in excess of £5bn. |
The approach was made by a consortium led by a Canadian infrastructure firm and a Kuwaiti investment fund. | The approach was made by a consortium led by a Canadian infrastructure firm and a Kuwaiti investment fund. |
Severn Trent supplies water to 7.7 million people in Wales and the Midlands. | Severn Trent supplies water to 7.7 million people in Wales and the Midlands. |
It was privatised along with other UK water boards in 1989, and it is the latest UK water company to be targeted by private investors. | It was privatised along with other UK water boards in 1989, and it is the latest UK water company to be targeted by private investors. |
'Modest premium' | |
Severn Trent said it had met the consortium for the first time on Tuesday, having earlier made an announcement confirming the approach. | Severn Trent said it had met the consortium for the first time on Tuesday, having earlier made an announcement confirming the approach. |
"At that meeting, a conditional proposal was tabled by the consortium at only a modest premium to the share price before the announcement [of the approach]," Severn Trent said. | "At that meeting, a conditional proposal was tabled by the consortium at only a modest premium to the share price before the announcement [of the approach]," Severn Trent said. |
News of the approach caused Severn Trent's share price to jump by nearly 14% in trading on Tuesday. | News of the approach caused Severn Trent's share price to jump by nearly 14% in trading on Tuesday. |
Shares fell 2.7% as trading opened on London on Wednesday. | |
The consortium consists of Canada's Borealis Infrastructure, the UK arm of the state-backed Kuwait Investment Authority, and the Universities Superannuation Scheme - a pension fund. | The consortium consists of Canada's Borealis Infrastructure, the UK arm of the state-backed Kuwait Investment Authority, and the Universities Superannuation Scheme - a pension fund. |
It is not clear whether the consortium will now make a revised offer. | |
UK utility companies have proved attractive to international investors in the past. | |
Both Thames Water and Yorkshire Water have been bought by consortiums including Far East sovereign wealth funds in recent years. |