Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Severn Trent Plc (SVT) Rejects £22 Per Share Offer

LONDON — The shares of Severn Trent Plc (LON:SVT) slumped 102 pence, or 5%, to 1,968 pence during early London trade this morning after the water company rejected a conditional £22 per share offer from a consortium of investors, which said it may now walk away from the deal.

The FTSE 100 member claimed the proposal from LongRiver Partners, which comprises Borealis Infrastructure Management, the Kuwait Investment Office and the University Superannuation Scheme, “failed to reflect the significant long-term value of Severn Trent Plc (LON:SVT) or to recognise its potential”.

Today’s announcement came one week after Severn Trent Plc (LON:SVT) rejected a £21.25 per share conditional proposal from the same consortium.

Andrew Duff, Severn Trent’s chairman, said this morning:

The Severn Trent Board has carefully considered this Proposal. The Board unanimously believes that this Proposal is not at a level that adequately compensates our existing shareholders for selling Severn Trent Plc (LON:SVT)’s increasingly rare combination of yield, inflation-linked business model and record of operational delivery for customers.

Duff also claimed: We have held private conversations with LongRiver and made clear that we have 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.

However, Michael Rolland, the chief executive of Borealis, retorted:

Since we submitted our proposal on 14 May 2013, no member of the Consortium or its advisors has met any of the directors of Severn Trent or its advisors, despite repeated requests.

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.

LongRiver’s £22 per share proposal is equivalent to 22 times Severn Trent Plc (LON:SVT)’s trailing earnings and would earn a projected 3.7% dividend yield.

Of course, whether that current share-price rating and the possibility LongRiver’s approach will eventually come to nothing now make Severn Trent Plc (LON:SVT) a sell is something only you can decide.

The article Severn Trent Rejects £22 Per Share Offer originally appeared on and is written by Maynard Paton.

Maynard Paton has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!