Severn Trent’s suitor considers walking away

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A CONSORTIUM bidding to buy water giant Severn Trent is considering pulling out after its third offer was rejected.

The £5.3 billion bid, valuing Severn at 2,200p a share, was dismissed by the firm’s board within hours of being tabled on Friday and was confirmed in an announcement to the stock exchange today.

Severn, which supplies 4.2 million customers across the Midlands and parts of Wales, said it failed to recognise the long-term value or potential of the company.

It means the LongRiver consortium must decide whether to put in a fourth offer before the expiry of tomorrow’s “put up or shut up” deadline or to walk away.

The consortium – made up of Canadian investment group Borealis, the Kuwait Investment Office and the Universities Superannuation Scheme – had a £4.96bn bid rejected. It is thought that the consortium has grown concerned at what it perceives as the water company’s lack of engagement.

Rejecting the latest offer on Friday, Severn chairman Andrew Duff said: “We have held private conversations with LongRiver and made clear we have no objections to fuller discussions in the event LongRiver puts forward a proposal that properly reflects the long-term value and potential of Severn Trent.”

He said the board unanimously agreed the bid was not high enough.

It was reported that an increase of about 40p a share would take Severn to the table. But LongRiver is determined there must be a meeting with the firm’s board before any move can take place.