Canada's Borealis may bid $8 bn for British utility Severn Trent: report
22 June 2015
After a failed attempt to take over British water utility Severn Trent Plc two years ago, Canadian investment giant Borealis Infrastructure is planning to table a £5-billion ($8 billion) bid to acquire the company, The Sunday Times reported yesterday.
The newspaper said, ''It is understood that the two sides opened talks last month and the discussions are at an early stage with no certainty of deal.''
In June 2013, Severn spurned a £22 a share offer by a consortium led by Borealis. Other partners included the UK's Universities Superannuation Scheme and the Kuwait Investment Office, the nation's sovereign wealth fund.
It is not clear whether Borealis' earlier partners would join its newest takeover attempt.
Coventry, England-based Severn established in 1974 is the UK's second-largest publicly-traded utility company. It provides clean water and waste-water services in United Kingdom and internationally.
The FTSE-100 company operates through two segments - Severn Trent Water and Severn Trent Services. Severn Trent Water provides high quality water and sewerage services to over 4.2 million households and businesses in the Midlands and mid-Wales.
In 2014, Severn reported revenue of £1.9 billion with a net profit of £435 million. It has around 8000 employees
Earlier this month, Severn secured a £530-million loan from the European Investment Bank, one of the largest ever loans agreed between the bank and a UK water company, to support the company's five-year investment plans.
Severn's shares closed at 2055 pence Friday in London, valuing the company at around £4.9 billion.
Toronto-headquartered Borealis is a $70-billion global infrastructure investor backed by Omers, one of Canada's biggest pension plans.
Borealis' portfolio includes the UK's gas distribution utility Scotia Gas Networks, High Speed 1 rail line and the country's largest port operator Associated British Ports.
The consortium's earlier bid for Severn which amounted £5.3 billion represented a 34-per cent premium based on the average closing share price for six months prior to the date of its initial offer.
However, the group did not place its concrete proposal before a set deadline, stating that ''it would not put forward a further proposal for the company in the absence of meaningful engagement.''
Severn's chairman Andrew Duff had stated, ''Severn Trent has a value to our shareholders above the level it indicated it was willing to pay. This difference in value has been at the heart of this process and the consortium has either not been able, or willing, to bridge that value gap.''