LONDON--The consortium that had been seeking to buy U.K. water
utility Severn Trent PLC (SVT.LN) for 5.3 billion pounds ($8.24
billion) has walked away from the deal, after three previous
conditional offers were rejected.
The consortium, LongRiver Partners, had until 1600 GMT Tuesday
to make a formal offer, according to the rules of U.K. mergers and
acquisitions supervisor the Takeover Panel, but chose not to,
meaning it won't be able to make another offer for Severn Trent for
six months.
"Having reviewed all publicly available information available to
it on the company, and in the absence of any meaningful engagement
with the Severn Trent Board, LongRiver will not increase its
pre-conditional offer," the consortium said.
LongRiver comprises Canada-based Borealis Infrastructure
Management Inc., the Kuwait Investment Office and U.K.-based
pension fund Universities Superannuation Scheme Ltd.
On Friday, Severn Trent's board unanimously rejected LongRiver's
most recent offer of GBP22 per ordinary share, which was an
increase of 3.5% over the consortium's previous one, but Severn
Trent's board said it still didn't value the utility highly
enough.
The offer represented, "a premium of only 20.5% to Severn
Trent's share price the day before the announcement of LongRiver's
interest," Severn Trent said in a statement Friday.
The decision to walk away from Severn Trent follows complaints
from the consortium that the water company's board was unwilling to
engage it in direct talks. "Since we submitted our proposal on 14
May 2013, no member of the consortium or its advisers has met any
of the directors of Severn Trent or its advisers, despite repeated
requests. The Severn Trent board has shown no interest in
discussing our pre-conditional offer with us," said Michael
Rolland, president and chief executive of Borealis, in a
statement.
Severn Trent Chairman Andrew Duff said in a statement Monday
that he did hold some private conversations with representatives of
LongRiver and had, "no objections to fuller discussions in the
event that LongRiver puts forward a proposal which properly
reflects the long-term value and future potential of Severn
Trent."
Severn Trent provides water and sewerage services to 4.2 million
households in the Midlands in England and parts of Wales. It also
treats water and wastewater internationally in the Americas, other
parts of Europe, the Middle East and Asia.
The consortium's bids came at a time when the U.K. regulator,
Ofwat, was conducting a five-year review of prices that water
companies are allowed to charge their customers, which will
determine the size of returns these companies can offer to
investors.
-Cassie Werber contributed to this story
Write to Alex MacDonald at alex.macdonald@wsj.com
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