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| Severn Trent rejects third takeover proposal from LongRiver consortium | Severn Trent rejects third takeover proposal from LongRiver consortium |
| (4 months later) | |
| Severn Trent took just a few hours on Friday evening to reject a third, improved takeover proposal from a consortium of determined financial investors seeking to take the FTSE 100 water firm private in a £5.3bn deal. | Severn Trent took just a few hours on Friday evening to reject a third, improved takeover proposal from a consortium of determined financial investors seeking to take the FTSE 100 water firm private in a £5.3bn deal. |
| Chairman Andrew Duff noted the latest sweetened approach, made public at lunchtime on Friday, proposed an offer at £22-a-share – only 3.5% up on a proposal that had been turned down earlier in the week. The approach came from a consortium of Canadian, British and Kuwaiti infrastructure investors. | Chairman Andrew Duff noted the latest sweetened approach, made public at lunchtime on Friday, proposed an offer at £22-a-share – only 3.5% up on a proposal that had been turned down earlier in the week. The approach came from a consortium of Canadian, British and Kuwaiti infrastructure investors. |
| After a hastily convened board meeting yesterday, Severn Trent issued a statement making clear Duff and his boardroom colleagues all believed the fresh price tag "continues to fail to reflect the significant long term value of Severn Trent or recognise its future potential". | After a hastily convened board meeting yesterday, Severn Trent issued a statement making clear Duff and his boardroom colleagues all believed the fresh price tag "continues to fail to reflect the significant long term value of Severn Trent or recognise its future potential". |
| Again Duff emphasised what he called the group's "increasingly rare combination of yield, inflation–linked business model and record of operational delivery for customers". | Again Duff emphasised what he called the group's "increasingly rare combination of yield, inflation–linked business model and record of operational delivery for customers". |
| The rejection of the approach leaves the consortium, which calls itself LongRiver, with little time to regroup and consider its options before a Takeover Panel deadline of 5pm on Tuesday. Unless headway is made towards a firm bid by then, LongRiver will be barred from returning with revised proposals for six months. | The rejection of the approach leaves the consortium, which calls itself LongRiver, with little time to regroup and consider its options before a Takeover Panel deadline of 5pm on Tuesday. Unless headway is made towards a firm bid by then, LongRiver will be barred from returning with revised proposals for six months. |
| If Severn Trent does remain independent it will buck a trend that has seen many of its peers – including Thames Water, Northumbrian Water and Yorkshire Water – become the subject to successful buyouts in recent years | If Severn Trent does remain independent it will buck a trend that has seen many of its peers – including Thames Water, Northumbrian Water and Yorkshire Water – become the subject to successful buyouts in recent years |
| Earlier on Friday, LongRiver had argued its improved bid represented a premium of 21% to the price at which shares in Severn Trent were trading before news of takeover interest emerged last month. Consortium members are Kuwait Investment Authority, a sovereign wealth fund; Borealis, the infrastructure investment arm of a Canadian local authority pension fund; and Britain's University Superannuation Scheme. | Earlier on Friday, LongRiver had argued its improved bid represented a premium of 21% to the price at which shares in Severn Trent were trading before news of takeover interest emerged last month. Consortium members are Kuwait Investment Authority, a sovereign wealth fund; Borealis, the infrastructure investment arm of a Canadian local authority pension fund; and Britain's University Superannuation Scheme. |
| LongRiver had declared the £22-a-share price, which included an imminent 45.41p proposed dividend, to be a "full and fair" price for a firm that provides water and sewerage services to 4.2m homes and businesses in the Midlands and mid-Wales. It also made clear it would not proceed to a hostile bid if it failed to win approval from Duff and the other directors. | LongRiver had declared the £22-a-share price, which included an imminent 45.41p proposed dividend, to be a "full and fair" price for a firm that provides water and sewerage services to 4.2m homes and businesses in the Midlands and mid-Wales. It also made clear it would not proceed to a hostile bid if it failed to win approval from Duff and the other directors. |
| LongRiver's interest in Severn Trent was announced last month and an offer valuing its equity at £4.96bn was rejected on Monday, despite it having been sweetened once already. | LongRiver's interest in Severn Trent was announced last month and an offer valuing its equity at £4.96bn was rejected on Monday, despite it having been sweetened once already. |
| Before Severn Trent's latest decision to rebuff LongRiver was announced, one of the members of the consortium urged the board to back the new offer. "LongRiver's proposal of £22 a share in cash represents certain and compelling value for Severn Trent shareholders," said Michael Rolland, chief executive of consortium member Borealis, a Canadian infrastructure fund. "We look forward to engaging with the Severn Trent board to enable us to make our formal offer to Severn Trent shareholders. Without engagement there can be no offer from the consortium." | Before Severn Trent's latest decision to rebuff LongRiver was announced, one of the members of the consortium urged the board to back the new offer. "LongRiver's proposal of £22 a share in cash represents certain and compelling value for Severn Trent shareholders," said Michael Rolland, chief executive of consortium member Borealis, a Canadian infrastructure fund. "We look forward to engaging with the Severn Trent board to enable us to make our formal offer to Severn Trent shareholders. Without engagement there can be no offer from the consortium." |
| Severn Trent has repeatedly stressed its achievements and prospects as justification for spurning proposals from LongRiver. It points to a 72% total shareholder return since April 2010. Since the business was privatised in 1990, it added, the group's regulatory capital value has expanded from £865m to £7.36bn. | Severn Trent has repeatedly stressed its achievements and prospects as justification for spurning proposals from LongRiver. It points to a 72% total shareholder return since April 2010. Since the business was privatised in 1990, it added, the group's regulatory capital value has expanded from £865m to £7.36bn. |
| Before news that the board had turned down the latest approach the stock market was already expressing skepticism that the improved price would satisfy Duff. Last night shares closed up 50p, or 2.48%, at £20.70 – some way short of LongRiver's new offer, even after accounting for the 45.41p proposed dividend which is included in the consortium's provisional price. | Before news that the board had turned down the latest approach the stock market was already expressing skepticism that the improved price would satisfy Duff. Last night shares closed up 50p, or 2.48%, at £20.70 – some way short of LongRiver's new offer, even after accounting for the 45.41p proposed dividend which is included in the consortium's provisional price. |
| The government has encouraged pension schemes to invest in infrastructure projects and has looked at a number of ways of incentivising deals. Water utilities are seen as an attractive investment because they are closely regulated. | The government has encouraged pension schemes to invest in infrastructure projects and has looked at a number of ways of incentivising deals. Water utilities are seen as an attractive investment because they are closely regulated. |
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