Takeover target Severn Trent unveils dip in profits

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Water utility Severn Trent, which this month rejected a takeover bid from a consortium of investors, has reported a drop in annual profits.

The firm said underlying pre-tax profits fell 3.3 per cent to £266.3 million in the year to the end of March, lower than the £271.5m expected by analysts.

Severn Trent, which did not mention the takeover approach in its results statement, attributed the dip in profits to an increase in infrastructure investment and a fall in water consumption because of last year’s wet summer.

A bidding consortium, including Borealis Infrastructure Management, the Kuwait Investment Office and the Universities Superannuation Scheme, has until 11 June to make a firm bid for walk away. An initial approach, believed to be worth £5.3 billion, has already been rejected because it offered “only a modest premium” to its share price.

Severn Trent proposed an 8.2 per cent increase in its full-year dividend to 75.85p.