Two water 
giants in 
sights of 
bidders

A consortium of bidders led by Canadian infrastructure investment group Borealis is rumoured to be likely to make a bid of around £5bn for Severn before a June 11 deadline. Severn supplies 4.2 million households and businesses including customers in Rotherham, Sheffield and Scunthorpe.

International suitors including Abu Dhabi’s sovereign wealth arm are also thought to be considering buying a 30 per cent stake in Yorkshire Water for between £1bn and £1.5bn, put up for sale by its private equity and fund owners.

Severn rejected an undisclosed offer from Borealis, the Kuwait Investment Office and Universities Superannuation Scheme earlier this month.

But the consortium is reportedly poised to return with a bid of around 2000p to 2100p, valuing it at just under £5bn – ahead of a Takeover Panel deadline of June 11. The report added the consortium will not go hostile if Severn’s board again rejects the offer.

Severn said earlier this month: ‘The board of Severn Trent has reviewed the proposal with its advisers and concluded that it completely fails to recognise the existing and potential value of Severn Trent.” It added the bid offered ‘’only a modest premium’’ to its share price.

Borealis already co-owns the UK’s biggest ports operator Associated British Ports and the London-to-Paris rail line.

Kelda was bought by Saltaire Water – a consortium including Citigroup, HSBC, fund manager M&G and Singapore’s sovereign wealth arm GIC – for £3bn in 2007. Yorkshire Water supplies about 5.6 million customers.

Kelda’s owners are said to have put a 30 per cent stake up for sale.

Kelda did not comment and the consortium could not be contacted.