The FTSE 100-listed utility company unveiled an increase in pre-tax profits to £215.2m for the year ended 31 March 2013, and said it will increase its full year dividend by 8.2 per cent to 75.85p per share.
Earlier this month, Severn Trent’s board had rejected a takeover offer from a consortium of investors comprising Borealis infrastructure, the Kuwait Investment Office and Britain’s Universities Superannuation Scheme, saying it undervalued the company.
Yesterday chief executive Tony Wray implied an offer of closer to £8bn would be more appropriate, saying the group’s regulated capital value could reach that level by 2015.
The value of the bid was never revealed but it is expected that a higher offer will be made before the 11 June deadline set by the Takeover Panel.
“Broad trends were in line with expectations although the group profit figure was a bit light,” Tina Cook, analyst at Charles Stanley, told City A.M. “Management did not explicitly comment on the takeover bid, but they did emphasise solid operational results, which underpin the value of the company.”
“The profit increase will spark further speculation and the market is certainly pricing it in,” said Brenda Kelly, senior market strategist at IG.
“I think Severn Trent should expect a higher offer, as it is a very sustainable business.” Severn Trent’s shares closed 0.7 per cent up at £20.49 yesterday.