Severn Trent soars amid £5bn takeover talk

SevernTrent have rebuffed a takeover bid. Picture: Getty
SevernTrent have rebuffed a takeover bid. Picture: Getty
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SHARES soared in one of Britain’s largest water companies yesterday after it emerged that it is a potential £5 billion-plus takeover target for an overseas consortium.

Severn Trent shares surged to the top of the FTSE 100 leaders’ board after the group confirmed a joint approach from Canadian investment group Borealis, the Kuwait Investment Office (KIO) and Universities Superannuation Scheme (USS).

Severn Trent said: “This approach is at a very early stage, no proposal has been made and there can be no certainty that an offer will be made, or as to the terms of any such offer, should one be forthcoming.”

The shares jumped nearly 20 per cent to an all-time high of 2,170p, before closing up 14 per cent at 2,077p. Industry sources say the consortium is mulling an offer of between 2,250p and 2,300p a share, valuing Severn Trent at about £5.3bn.

The group supplies more than four million households and businesses across the English Midlands and parts of Wales. A takeover would make it the latest British utility to fall into foreign ownership after previous buyouts including Northumbrian Water, Thames Water and Yorkshire Water.

Borealis already co-owns the UK’s biggest ports operator, Associated British Ports, and the London to Paris High Speed 1 rail line on which Eurostar runs. It invests on behalf of thousands of Canadian workers and pensioners in the Ontario Municipal Employees Retirement System.

KIO invests the emirate’s oil wealth, while the USS invests the pensions of UK higher education workers.