People power blocks water firm takeover

ACTIVIST shareholders have foiled the bid by a FTSE 100 firm to take over their local water company.

Severn Trent’s attempt to snap up Dee Valley Water was voted down by hundreds of new shareholders made up of angry employees and locals.

Many had only recently been granted shares after a mystery investor handed them out in a bid to block the takeover.

The High Court will now decide whether these votes should be allowed, or if the takeover should go through based on the wishes of longer-standing shareholders.

The unprecedented twist is the latest step in a long- running bidding war for Dee Valley, which supplies about 280,000 customers in North Wales and Cheshire, between Severn Trent and investment fund Ancala.

Ancala opened bidding in October before being outbid twice by Severn Trent, whose offer of £84m was approved by Dee Valley’s board at the end of November.

But the takeover has been opposed by locals, who fear Sev- ern Trent’s ownership will lead to job losses, less use of local suppliers and worse customer service.

In late December an individual believed to be a Dee Valley employee snapped up 461 shares before transferring 445 to individuals, the Mail understands.

Under normal takeover rules, larger shareholders decide on bids because they get one vote per share they hold. So if someone holds 25pc of shares in a company, they get 25pc of the votes.

But under the scheme of arrangement for Dee Valley, the Severn Trent takeover can happen only if approved by 75pc of total voting shares and, crucially, a majority of individual shareholders.

Because hundreds of locals now hold shares, this has boosted the number of shareholders.

At yesterday’s meeting in Wrexham to vote on the takeover, Dee Valley’s board decided not to include the new shareholders’ votes initially.

However, once all votes were counted, the takeover failed because just 43.8pc of all shareholders approved of the bid.

Had the new shareholders’ votes not been included the takeover would have been passed with a 91.9pc vote in favour. Dee Valley has therefore asked the High Court to decide whether the new votes should count.

Board chair Jon Schofield said: ‘The board has taken steps to ensure that the court hears representations from shareholders in order to make a decision which will provide genuine clarity on the outcome.’

Dee Valley’s largest shareholders are investment giant Axa with 1.1m – a 25.5pc stake – and insurance giant Aviva, with 9.6pc.

Ancala vice-president Tim Power said his fund remained willing and ready for its £78.5m offer to be accepted.

He added: ‘I would like to think that an impartial judge would be able to look at the circumstances and understand that these employees have not just come out of the woodwork the day before. They have been protesting this for months and months and are exercising their rights to do something about it.’

Severn Trent has said it plans to make a significant investment in the region.

The hearing is due to take place on January 25 and Dee Valley has pledged to abide by the outcome.