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Severn Trent receives takeover approach Severn Trent shares surge after takeover approach
(about 7 hours later)
UK water supplier Severn Trent has said that a group of international investors is interested in buying the company. Shares in the water company Severn Trent have surged after it confirmed a group of international investors was interested in buying it.
Its shares jumped more than 18% in early trading to reach a record high before falling back later.
The investors include a Canadian infrastructure company and the Kuwaiti government investment fund.The investors include a Canadian infrastructure company and the Kuwaiti government investment fund.
Severn Trent supplies water to about 7.7 million people in Wales and the Midlands.Severn Trent supplies water to about 7.7 million people in Wales and the Midlands.
The firm said the bid approach was "at a very early stage" and there was no certainty that an offer would be made. Its shares jumped 15% on the news. The firm confirmed that it had received the bid approach, but said it was "at a very early stage" and there was no certainty that an offer would be made.
The consortium of potential bidders consists of Canada's Borealis Infrastructure, the Kuwait Investment Office, and Universities Superannuation Scheme - a UK pension fund.The consortium of potential bidders consists of Canada's Borealis Infrastructure, the Kuwait Investment Office, and Universities Superannuation Scheme - a UK pension fund.
The Kuwait Investment Office is the UK branch of the Kuwait Investment Authority, which manages funds on behalf of the Kuwaiti state.The Kuwait Investment Office is the UK branch of the Kuwait Investment Authority, which manages funds on behalf of the Kuwaiti state.
Severn Trent said the consortium had not made a takeover proposal yet. "There can be no certainty that an offer will be made or as to the terms of any such offer, should one be forthcoming," it said.
June deadlineJune deadline
A report carried by the Dow Jones-owned newspaper Financial News suggested a bid could be worth £5.3bn ($8.1bn). Severn Trent said the consortium had not made a takeover proposal yet. "There can be no certainty that an offer will be made or as to the terms of any such offer, should one be forthcoming," it said.
The surge in the share price following confirmation of the approach values Severn Trent slightly below that at £5.1bn. But an earlier report carried by the Dow Jones-owned newspaper Financial News suggested a bid could be worth £5.3bn ($8.1bn).
The surge in the share price has valued the company's equity at slightly below that figure.
UK takeover rules mean the consortium must now decide whether or not to submit a formal bid for Severn Trent by 11 June.UK takeover rules mean the consortium must now decide whether or not to submit a formal bid for Severn Trent by 11 June.
Severn Trent was formed following the privatisation of UK water authorities in 1989.Severn Trent was formed following the privatisation of UK water authorities in 1989.
It is one of only three UK water companies still listed on the stock market.
The other two are United Utilities and Pennon, and both saw their shares rise by more than 4%.
UK utility companies have proved to be popular investments for international investment firms looking for steady returns.UK utility companies have proved to be popular investments for international investment firms looking for steady returns.
In 2006, Thames Water was bought by a consortium led by Australian investment group Macquarie and a Chinese sovereign wealth fund.In 2006, Thames Water was bought by a consortium led by Australian investment group Macquarie and a Chinese sovereign wealth fund.
Yorkshire Water was bought in 2007 by a consortium including Citigroup and HSBC, along with Singapore sovereign wealth fund GIC.Yorkshire Water was bought in 2007 by a consortium including Citigroup and HSBC, along with Singapore sovereign wealth fund GIC.
Canada's Borealis already owns stakes in UK utility and infrastructure companies, including Associated British Ports and gas provider Scotia Gas Networks.Canada's Borealis already owns stakes in UK utility and infrastructure companies, including Associated British Ports and gas provider Scotia Gas Networks.