Severn Trent at the centre of a possible £5.3bn takeover

MIDLAND utility Severn Trent is at the centre of a takeover bid which values the water company at around £5.3bn.

The board at the Coventry-based group confirmed today that it had been approached by a consortium of international investors, although it stressed no offer had been made.

The consortium is made up of Canada’s Borealis Infrastructure Management Inc, the Kuwait Investment Office and Universities Superannuation Scheme Ltd.

Borealis is the infrastructure arm of the Ontario Municipal Employees Retirement System. Should an offer be forthcoming the move would be reminiscent of the stake taken in Birmingham Airport by the Ontario Teachers’ Pension Plan.

The vast resources available from the Kuwait fund, set up to manage the Kuwaiti government’s overseas investment strategy, lend credence to the approach.

Reports have claimed the consortium, which is supposedly being advised by Deutsche Bank, is prepared to bid up to £23 a share, valuing Severn Trent at £5.3bn.

In a statement Severn Trent, which supplies water to more than four million households, said it noted the press speculation regarding a possible offer and added: “The board of Severn Trent announces that it has received an approach with a view to making a proposal from a consortium. This may or may not lead to an offer being made for Severn Trent.

“This approach is at a very early stage, no proposal has been made and there can be no certainty that an offer will be made or as to the terms of any such offer, should one be forthcoming.”

In accordance with stock market rules, the consortium has until June 11 to either announce its intention to make an offer or to clarify it will not proceed with the deal.

Severn Trent is the largest of the 10 regulated water and sewage businesses in the UK.