The water company Severn Trent has rejected a £4.96bn revised bid from a consortium of investors on the grounds that it failed to recognise the long-term future and potential of the company.
The board unanimously rejected an offer of £21.25 a share from LongRiver Partners, a consortium including Canada's Borealis Infrastructure Management, the Kuwait Investment Office and UK pension fund the Universities Superannuation Scheme.
Severn Trent, which supplies water and sewerage services to 4.2m businesses and households in the Midlands and Wales, rejected an initial proposal last month.
It said on Monday the revised offer assumed that a final dividend of 45.51p a share already announced for the year to 31 March was not paid to shareholders.
If the final dividend was paid, the offer would value each ordinary share at £20.79p, the company said. That would value Severn at £4.96bn.
It added that the offer, which represents a premium of 16% to Severn's share price the day before the announcement of LongRiver's interest, "fails to reflect the significant long-term value of Severn Trent or to recognise its future potential".
Andrew Duff, Severn Trent's chairman, said: "Severn Trent is a high-quality company with a record of long-term delivery for shareholders and customers.
Our business benefits from long-term inflation-linked revenues, good prospects for further capital investment and a strong record of improving operational performance.
"The board unanimously believes that LongRiver's revised conditional proposal at 2,079.49 pence per share, excluding the final dividend which we have already announced, fails to value the attractions to Severn Trent's shareholders of Severn Trent's increasingly rare combination of yield, inflation-linked business model and potential."
The consortium has a "put up or shut up" deadline of 11 June to come back with an improved offer. Severn emphasised its confidence in its ability to grow, as well as a commitment to raising dividends.
It said it was "well prepared for the next price review and for longer-term developments in the future regulatory landscape for the water industry".
Tina Cook, an analyst at Charles Stanley, said: "Performance remains robust with bad debts stable, absolute progress on key performance indicators, customer satisfaction continuing to trend in the right direction, and leakage at a 20-year low."
guardian.co.uk
The board unanimously rejected an offer of £21.25 a share from LongRiver Partners, a consortium including Canada's Borealis Infrastructure Management, the Kuwait Investment Office and UK pension fund the Universities Superannuation Scheme.
Severn Trent, which supplies water and sewerage services to 4.2m businesses and households in the Midlands and Wales, rejected an initial proposal last month.
It said on Monday the revised offer assumed that a final dividend of 45.51p a share already announced for the year to 31 March was not paid to shareholders.
If the final dividend was paid, the offer would value each ordinary share at £20.79p, the company said. That would value Severn at £4.96bn.
It added that the offer, which represents a premium of 16% to Severn's share price the day before the announcement of LongRiver's interest, "fails to reflect the significant long-term value of Severn Trent or to recognise its future potential".
Andrew Duff, Severn Trent's chairman, said: "Severn Trent is a high-quality company with a record of long-term delivery for shareholders and customers.
Our business benefits from long-term inflation-linked revenues, good prospects for further capital investment and a strong record of improving operational performance.
"The board unanimously believes that LongRiver's revised conditional proposal at 2,079.49 pence per share, excluding the final dividend which we have already announced, fails to value the attractions to Severn Trent's shareholders of Severn Trent's increasingly rare combination of yield, inflation-linked business model and potential."
The consortium has a "put up or shut up" deadline of 11 June to come back with an improved offer. Severn emphasised its confidence in its ability to grow, as well as a commitment to raising dividends.
It said it was "well prepared for the next price review and for longer-term developments in the future regulatory landscape for the water industry".
Tina Cook, an analyst at Charles Stanley, said: "Performance remains robust with bad debts stable, absolute progress on key performance indicators, customer satisfaction continuing to trend in the right direction, and leakage at a 20-year low."
guardian.co.uk
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