Dee Valley switches to Severn Trent bid, gazumping Ancala again

Water company Dee Valley will recommend to shareholders accept a new £84m a revised bid made by FTSE 100-listed Severn Trent overnight, leaving investment company Ancala Fornia gazumped again.

Dee Valley, which is listed on the FTSE Fledgling index, said it considered a revised bid from Severn Trent made late on Wednesday was a “superior offer in terms financial value” for shareholders, and has therefore withdrawn its recommendation of Ancala’s revised proposal.

The company, which is being advised by broker Investec, said the revised terms from Severn Trent are “fair and reasonable”.

In response to Ancala’s revised bid, Severn Trent increased its offer to £84m on Wednesday evening, whereby Dee Valley shareholders would receive 1,825p per share and a cash offer at 1,713p for non-voting shares.

On Tuesday Ancala, an independent infrastructure investment manager based in London, had revised its initial bid to 1,706p per share, which included a cash offer for non-voting rights at 1,602, coming to £78.5m.

Last week, following Ancala’s initial offer for £71.3m in October, Severn Trent initially agreed to buy its smaller rival for about £78.5m, with 1,705p in cash per share and 1,607p for non-voting shares.

Shares in Dee Valley were up 5% to 1,815p at 1100 GMT but shares in Severn Trent were down 1.25% to 2,205p at 1114 GMT.