Published on 18th July 2013
Severn Trent’s stocks have plunged since rebuffing a potential bid by Long River Partners, a consortium led by Borealis Infrastructure Management, which offered £21.25 a share for the group last month. The offer was at a premium of about 28 per cent to the group’s regulatory asset base (RAB), which is the value of the group’s assets as determined by regulators. “Of course, if we look at management’s argument as to why the bid was too low then there is some merit,” The Telegraph’s Questor said. “Severn is a significant dividend payer, with last year’s payment being 75.85p, so investors will see total shareholder returns moving above the £20 level after holding the shares for a few more years.” Trading on a current-year earnings multiple of 19, falling to 18.8, and yielding a prospective 4.6pc, Questor recommends a ‘hold’ for the shares.