FTSE 100-listed Severn Trent yesterday rejected a £4.96bn takeover offer from LongRiver Partners, saying the bid fails to reflect the utility firm’s long-term value or future potential.
Severn Trent said that the consortium, which comprises Borealis Infrastructure Management, the Kuwait Investment Office and UK
pension fund the Universities Superannuation Scheme, had offered 2,079.49p per share. The utility firm rejected an initial approach of an undisclosed value from the consortium last month.
Michael Rolland, president and chief executive of Borealis, said that the consortium was “surprised and disappointed” at Severn Trent’s rejection of its bid, which it said offered “certain and compelling value to Severn Trent’s shareholders”.
Severn Trent’s shares edged down 0.3 per cent following the news. “The modest share price reaction suggests that the market believes a deal remains a possibility before the ‘put up or shut up’ deadline on 11 June,” said broker Charles Stanley.
ADVISERS SEVERN TRENT
THEIR second bid may have been knocked out, but the consortium remains in the ring, with a third offer for Severn Trent widely expected before the 11 June deadline. Deutsche Bank, led by Alan Brown and James Agnew, and RBC Capital Markets, headed up by Dai Clement, are advising the bidders.
Brown has been co-head of Deutsche Bank’s Global Natural Resources Group since 2008 and has advised on a number of deals including National Grid’s £3.3bn rights issue. Agnew is chairman of UK corporate broking and joined Deutsche Bank in 2002 from Merrill Lynch. He has over 20 years’ experience in corporate broking and has advised on the acquisition of Arriva by Deutsche Bahn, Kraft’s acquisition of Cadbury, Old Mutual on its offer for Skandia, DP World on its offer for P&O and Scottish and Newcastle on the offer by Carlsberg/Heineken.
Rothschild and Citi are advising Severn Trent on the takeover approach, led by Crispin Wright and Simon Lindsay respectively. Citi’s Lindsay was one of the key bankers working on the long-feted Glencore Xstrata merger.
Herbert Smith acted as legal counsel for the water supplier, with Stephen Wilkinson heading up the team. Wilkinson is global head of M&A at the law firm and has 20 years’ experience advising on a range of major listed and other international companies on mergers and acquisitions, joint ventures, demergers and other corporate transactions and wider governance issues.