Severn Trent set to splash out on £78.5m acquisition

SEVERN Trent Water, a subsidiary of the main Coventry-based utility group, is to invest £78.5m in the strategic acquisition of a rival water company.

The company has reached agreement to acquire the entire share capital of the Dee Valley Group, the holding company for subsidiary business, Dee Valley Water.

Based in Wrexham, Dee Valley supplies water to approximately 258,000 customers in Wrexham, Chester, North East Wales and parts of the North West making it a natural fit with neighbouring Severn Trent.

Severn Trent is currently undertaking a £3bn investment programme in its infrastructure, which will now be extended to cover the Dee Valley area.

The company has said it also intends to maintain a separate Welsh licence for Dee Valley and, subject to regulatory approval, intends that the whole of Severn Trent’s business in Wales will be regulated under Welsh Government Policy.

Severn Trent said the upgrades to infrastructure would benefit Dee Valley’s customers, including support for the most vulnerable. It has pledged that Dee Valley customers will share in half of any wholesale cost efficiencies achieved, which will be reflected in future bills.

The West Midlands utility said it was confident that by carefully applying its operating model, economies of scale could be achieved.

The Dee Valley board has said it believes the acquisition is in the best interests of shareholders and has recommended them to approve the deal.

The move also ends attempts by rival bidder Ancala Fornia to secure the Dee Valley operation.

Liv Garfield, chief executive of Severn Trent said: “The announcement of our purchase of Dee Valley represents an opportunity for Severn Trent to apply its successful operating model for the benefit of customers across an enlarged asset base, in a neighbouring geographic area.

“We intend to bring real benefits to Dee Valley’s operations and customers by bringing best practice and investment to support and enhance the service the company provides and by sharing the savings we can generate. We are looking forward to engaging with the customers and Welsh regulators and bringing our skills in water services to Dee Valley.”

Jon Schofield, chairman of Dee Valley, responded with: “We believe that the acquisition provides attractive value to Dee Valley shareholders.”