Published on 7th June 2013
Severn Trent is one of a dwindling group of remaining publicly listed water companies. For The Times´s Tempus the bidding for the water firm is not yet over. While the newspaper column does not think that its suitors will pay the 23 pounds which some institutional investors expect, it does expect a higher price than the 20.79 pounds already tabled by investment consortium Borealis Infrastructure Management. The key, as is well known, is the value assigned to the company´s debt. Borealis is trying to scare investors by arguing that the company´s net debt is understated and that the regulator - Ofwat - will tighten the return on capital allowed. Another aspect to be taken into account is that the deadline for the offer could yet be extended. If cautious then an investor can always sell now and then buy back the shares for less if he believes the bid will fail, Tempus adds, although the its expectation is rather the contrary.