Welsh water bidding war heats up after activist locals attempt to block Severn Trent takeover
An investment company is still hopeful of buying a Welsh water company, with angry locals seeking to block the rival bid in an unprecedented case of shareholder activism.
FTSE 100-listed utility firm Severn Trent agreed an £84m, £18.25-per-share, takeover for Dee Valley Water in November.
However, in a never-before-seen move, the deal was blocked last week by 445 individuals – thought to be locals and employees – who have recently taken control of 461 shares. It is believed that these shares were transferred after one individual bought them in December.
Next week, the High Court will decide whether the votes should be allowed to block the deal.
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And Ancala Fornia said in a statement today that it would keep its 1,706-per-share offer for Dee Valley open until after the High Court ruling as another option.
Spence Clunie, managing partner of Ancala Partners, said:
If the court determines that the votes of the transferred shares should have been accepted at the court meeting and, therefore, that the voting condition relating to the Severn Trent scheme has not been met, we will be in a position to ensure Dee Valley shareholders still have a credible and deliverable option.
Under the Severn Trent scheme of arrangement, the deal required approval 75 per cent of the volume of shares – easily obtained, with support from big institutional investors like Axa and Aviva – but also from a majority of individual shareholders.
Overall, 363 shareholders representing 87 per cent of the total volume voted in favour of the deal, while 466 investors representing 13 per cent of shares said no to the transaction.
The Dee Valley board said in a statement that it is “determined to ensure that the outcome of the [vote] properly reflects the views of our shareholders, that the process has been completed in a far and proper way, and that there will be no uncertainty as to how votes should be recorded”.
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Chairman Jon Schofield said: “Following a number of unusual trades, our legal advisers made the board aware that the circumstances surrounding the vote were unprecedented and it considered that the only responsible course of action would be to seek a determination from the court as to how to correctly proceed.
The board has taken steps to ensure that the court hears representations from shareholders in order to make a decision which will provide genuine clarity on the outcome.
These representations will be made at a court hearing now scheduled for 25 January and the board will abide by the outcome, whatever it may be.