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Severn Trent to buy rival water company Dee Valley in £78.5m deal

Published 16/11/2016

The deal sees Severn Trent gatecrash plans by rival bidder Ancala
The deal sees Severn Trent gatecrash plans by rival bidder Ancala

Severn Trent has agreed to buy rival Dee Valley Water in a deal worth around £78.5 million.

Severn will pay 1,705p a share for Dee Valley, which serves around 260,000 customers in Cheshire and North Wales.

The deal sees Severn Trent gatecrash plans by rival bidder Ancala - an infrastructure investment manager - which had agreed to buy Dee Valley for around £71.3 million.

Dee Valley said it was now backing Severn Trent's higher bid and had withdrawn its recommendation for Ancala's offer.

Severn Trent said Dee Valley would be a good fit with the firm, as it operates in neighbouring areas to the group.

It added that it would continue to invest in infrastructure in the Dee Valley region and would also support vulnerable customers.

"Dee Valley's customers will share in half of any wholesale cost efficiencies achieved, which will be reflected in future bills," it added.

Severn Trent chief executive Liv Garfield said: "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."

Dee Valley shares surged 12% after details of the takeover plans were announced, while Severn Trent's stock was 3% higher.

Dee Valley has been supplying water for more than 150 years.

The company was formed in 1997 from the merger of the former Chester Water Company and Wrexham Water Company.

It made profits of £6.6 million on revenues of £23.1 million in the year to the end of March.

FTSE 100-listed Severn Trent is one of the largest water and sewerage companies in the UK, serving more than 4.3 million households and businesses in the Midlands and Mid Wales.

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