Bidder for Severn Trent walks away

The LongRiver consortium, which had three approaches spurned by Severn Trent, said it would not table a new offer unless talks with the utility’s board were forthcoming.

“We told them what we needed, they didn’t do anything, that’s their prerogative,” a source familiar with the consortium’s thinking said. “Never at any stage did they say ‘If you bid X or Y that would be acceptable’.”

The source said there had been no meetings since the first approach on May 14.

The consortium’s last approach, pitched at 2,200p a share and valuing the water company at £5.2bn, was given short shrift by Severn Trent on Friday, saying that it did not reflect the long-term value or potential of the company.

Its stance tested the patience of the bidder, comprising Borealis Infrastructure, part of Canadian pension fund OMERS, a Kuwaiti sovereign wealth fund and Britain’s Universities Superannuation Scheme.

The two parties had until 4pm yesterday to start talks, under a timetable imposed by the mergers and acquisitions regulator.

Severn Trent said it had always been open to negotiations provided that LongRiver put forward a proposal which properly reflected the long-term value and potential of the company.

“We’ve consistently made clear to the consortium our belief Severn Trent has a value to our shareholders above the level it indicated it was willing to pay,” Severn Trent chairman Andrew Duff said.