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Takeover proposal not good enough, says Severn Trent

Utilities giant Severn Trent has brushed off a bid approach from a consortium of foreign investors, saying it completely undervalues the firm.

Utilities giant Severn Trent has brushed off a bid approach from a consortium of foreign investors, saying it completely undervalues the firm.

The UK water company said that it had met the consortium - comprising of Canadian infrastructure investor Borealis, the Kuwait Investment Office and Universities Superannuation Scheme Limited - on Tuesday for the first time to discuss a possible offer.

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However the proposal tabled by the potential bidders came at only a "modest premium" to the share price before the initial approach was revealed to the market, Severn Trent said.

Market chatter had rumoured the proposal to be in the region of £5.3bn. According to the Financial News magazine, sources said that a potential offer could come between 2,250p and 2,300p a share.

This compares with Monday's closing price of 1,825p, after the stock had gained 16% since the start of 2013. Shares then soared by a further 14% on Tuesday after news of the approach was released, pushing the share price to 2,077p.

"The board of Severn Trent has reviewed the proposal with its advisers and concluded that it completely fails to recognise the existing and potential value of Severn Trent," the company said in a statement on Wednesday.

"Accordingly the board has informed the consortium that it has rejected the proposal."

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