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Water firm Severn Trent urged to discuss offer

PUBLISHED: 09:11 10 June 2013 | UPDATED: 09:11 10 June 2013

Photo: Joe Giddens/PA Wire

Photo: Joe Giddens/PA Wire

The consortium circling Severn Trent today said it will pull the plug on its £5.3 billion bid interest unless the water company enters into talks.

LongRiver has until 5pm on Tuesday to table another offer but insists there will be no new proposal without "meaningful engagement" with Severn's board.

The consortium, which is led by Canadian investment group Borealis, was spurned for a third time on Friday evening after tabling a revised proposal worth 2200p a share - a valuation deemed too low by the Severn board.

Shares in the water company fell 5% today following the latest rejection.

Borealis chief executive Michael Rolland said there had been no discussions since the consortium first submitted a proposal to Severn on May 14.

He said: "The Severn Trent board has shown no interest in discussing our pre-conditional offer with us.

"In the absence of any such engagement, there will be no further proposal from the consortium and no offer for Severn Trent shareholders to consider."

Severn, which supplies 4.2 million customers across the Midlands and parts of Wales, said LongRiver's proposals failed to recognise the long-term value or future potential of the company.

It has been reported that an increase of around 40p a share would be enough to bring Severn to the table, although LongRiver is determined that there must be a meeting with the water firm's board before any move can take place.

Under Takeover Panel rules, LongRiver must decide whether to put in a new, fourth offer before the expiry of Tuesday's "put up or shut up" deadline or walk away.

British water companies are prized by investors such as pension funds, sovereign wealth groups and private equity firms for their monopoly over customers and relatively stable earnings, which are tied to inflation.

Severn is the latest British utility to attract interest after buyouts for rivals Yorkshire Water, Northumbrian Water and Thames Water.

Borealis already co-owns the UK's biggest ports operator Associated British Ports and the London to Paris High Speed 1 rail line.

It invests on behalf of thousands of Canadian workers and pensioners in the Ontario Municipal Employees Retirement System.

The other members of the LongRiver consortium are the Kuwait Investment Authority, which invests the emirate's vast oil wealth, and the Universities Superannuation Scheme, which invests the pensions of UK higher education workers.

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