Water firm takeover revolt is scuppered

A JUDGe has blocked an unprecedented bid by workers to prevent the takeover of their employer by a FTSe 100 giant.

Dee Valley Water staff bought or were gifted shares so they could vote down the company’s takeover by Severn Trent.

But the High Court yesterday ruled their votes should not count, saying many were acting out of fears for their jobs rather than in the interests of all shareholders.

Judge Sir Geoffrey Vos said an ‘intelligent and honest’ shareholder would reasonably approve Severn Trent’s £84m offer, and it should be allowed to go ahead.

But workers could launch an appeal at a hearing tomorrow.

Dee Valley Water serves around 125,000 customers in the North West and north-east Wales.

In November its board approved a 1825p-per- share takeover offer from water company Severn Trent after a bidding war with investment fund Ancala Fornia, which offered 1706p per share.

In an effort to block the takeover, employee Huw Cashmore bought Dee Valley shares for £7,520 ahead of a shareholder vote, court papers say. He transferred 434 shares to colleagues and others who opposed the takeover at the vote on January 12, when the final tally was 466 against and 362 in favour.

even though the opponents held only a tiny proportion of total shares, the takeover of Dee Valley was unusual in requiring the approval of most individual shareholders as well as the total number of shares.

Dee Valley asked the High Court to decide whether the new shareholders’ votes should be allowed to count. At a hearing, Martin Moore QC, representing Severn Trent, said many of those objecting to the deal were voting to preserve their own or relatives’ jobs.

James Potts QC, representing seven activists including Cashmore, said this was ‘a fairly narrow, blinkered, fairly depressing view of the approach to be taken’.

He added: ‘The burden is not on my clients to show why they should be entitled to use their shares, the burden lies on others to show that they should not.’

Lord Justice Vos said the case raised ‘difficult and important questions’, adding: ‘ This could take off. Imagine the impact on shareholders around the world.’

But he sided with Severn Trent, noting that the takeover was ‘very much in the financial interests of the members of the company’.

In his judgment, he said: ‘I have concluded that members voting at a class meeting directed by the court must exercise their power to vote for the purpose of benefiting the class as a whole, and not merely individual members only.’

Local politicians had campaigned against the takeover and expressed disappointment. Llyr Gruffydd, Plaid Cymru’s North Wales Assembly Member, said: ‘Small shareholders have been disregarded by the judgment while big corporate shareholders will be laughing all the way to the bank.’

Disappointed shareholders said they were considering whether to appeal. They added: ‘The objecting shareholders are pleased that the court concluded that their actions were not dishonest and that they held a genuine belief that the takeover of the company by Severn Trent should be defeated for the greater good of the community at large.’

The case has been adjourned until tomorrow.