Consortium Walks Away from Severn Trent Offer

LONDON--The consortium that had been seeking to buy U.K. water utility Severn Trent PLC (SVT.LN) for 5.3 billion pounds ($8.24 billion) has walked away from the deal, after three previous conditional offers were rejected.

The consortium, LongRiver Partners, had until 1600 GMT Tuesday to make a formal offer, according to the rules of U.K. mergers and acquisitions supervisor the Takeover Panel, but chose not to, meaning it won't be able to make another offer for Severn Trent for six months.

"Having reviewed all publicly available information available to it on the company, and in the absence of any meaningful engagement with the Severn Trent Board, LongRiver will not increase its pre-conditional offer," the consortium said.

LongRiver comprises Canada-based Borealis Infrastructure Management Inc., the Kuwait Investment Office and U.K.-based pension fund Universities Superannuation Scheme Ltd.

On Friday, Severn Trent's board unanimously rejected LongRiver's most recent offer of GBP22 per ordinary share, which was an increase of 3.5% over the consortium's previous one, but Severn Trent's board said it still didn't value the utility highly enough.

The offer represented, "a premium of only 20.5% to Severn Trent's share price the day before the announcement of LongRiver's interest," Severn Trent said in a statement Friday.

The decision to walk away from Severn Trent follows complaints from the consortium that the water company's board was unwilling to engage it in direct talks. "Since we submitted our proposal on 14 May 2013, no member of the consortium or its advisers has met any of the directors of Severn Trent or its advisers, despite repeated requests. The Severn Trent board has shown no interest in discussing our pre-conditional offer with us," said Michael Rolland, president and chief executive of Borealis, in a statement.

Severn Trent Chairman Andrew Duff said in a statement Monday that he did hold some private conversations with representatives of LongRiver and had, "no objections to fuller discussions in the event that LongRiver puts forward a proposal which properly reflects the long-term value and future potential of Severn Trent."

Severn Trent provides water and sewerage services to 4.2 million households in the Midlands in England and parts of Wales. It also treats water and wastewater internationally in the Americas, other parts of Europe, the Middle East and Asia.

The consortium's bids came at a time when the U.K. regulator, Ofwat, was conducting a five-year review of prices that water companies are allowed to charge their customers, which will determine the size of returns these companies can offer to investors.

-Cassie Werber contributed to this story

Write to Alex MacDonald at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires