THE CONSORTIUM that made a bid for Severn Trent is expected to return with a higher offer for the water company this week, ahead of the 11 June deadline set by the Takeover Panel.
The board rejected an earlier offer from a group including Borealis infrastructure, the Kuwait Investment Office and Britain’s Universities Superannuation Scheme, saying it had offered only a modest premium to its previous share price. It did not disclose the terms of the deal at the time but the consortium is expected to make a revised bid in the region of £20 to £21 per share, valuing Severn Trent at just under £5bn. An offer could come as soon as this Thursday when the utility, which supplies 7.7m people in the UK with drinking water, is due to publish its annual figures and make the case for why the original offer, believed to have been under £20 a share, undervalued the company. UK water company prices are subject to regulatory review every five years with the next one due in 2015. Some investors have highlighted that the risk of regulatory change could hurt Severn Trent’s earnings power.
The company is expected to report a one per cent rise in full-year profits to around £279m.
Allister Heath is away. His column will return on Thursday.