Severn Trent to acquire Dee Valley Water

Posted: Friday 2nd December 2016

The Boards of Dee Valley and Severn Trent are pleased to announce that they have reached agreement on the terms of a recommended acquisition of the entire issued and to be issued voting and non-voting ordinary share capital of Dee Valley by Severn Trent Water.

Under the terms of the Acquisition, Dee Valley Ordinary Voting Shareholders will receive 1,705 pence in cash per Dee Valley Ordinary Voting Share they hold. The Acquisition includes a comparable cash Offer for the Dee Valley Ordinary Non-Voting Shares priced at 1,601 per share, in accordance with Rule 14 of the Code. The Acquisition values the entire issued ordinary share capital of Dee Valley at approximately £78.5 million.

Dee Valley is a natural fit for Severn Trent as it operates in neighbouring areas in England and Wales.

Severn Trent intends to maintain a separate Welsh licence for Dee Valley and, subject to regulatory approval, intends that the whole of Severn Trent's business in Wales will be regulated under Welsh Government Policy.

Severn Trent is one of the leading water companies and intends to enhance the current service offering for Dee Valley's customers, including by extending support for vulnerable customers. Dee Valley's customers will share in half of any wholesale cost efficiencies achieved, which will be reflected in future bills.

Severn Trent is undertaking an over £3 billion investment programme in AMP6. Severn Trent intends to fully support continued investment in infrastructure in the Dee Valley region.

Severn Trent is confident that, through the application of Severn Trent's successful operating model, economies of scale and lower cost of financing to the operations of Dee Valley, this will deliver attractive returns to Severn Trent shareholders. The Acquisition is expected to be earnings accretive from completion.

The Dee Valley Board believes that the terms of the Acquisition are in the best interests of Dee Valley Ordinary Shareholders as a whole and intends to recommend unanimously that: Commenting on the Acquisition, Liv Garfield, Chief Executive of Severn Trent said:

"The announcement of our purchase of Dee Valley represents an opportunity for Severn Trent to apply its successful operating model for the benefit of customers across an enlarged asset base, in a neighbouring geographic area. We intend to bring real benefits to Dee Valley's operations and customers by bringing best practice and investment to support and enhance the service the company provides and by sharing the savings we can generate. We are looking forward to engaging with the customers and Welsh regulators and bringing our skills in water services to Dee Valley."

Jon Schofield, Chairman of Dee Valley added:

"The Board of Dee Valley has reached agreement on the terms of a recommended acquisition of Dee Valley by Severn Trent Water. We believe that the Acquisition provides attractive value to Dee Valley shareholders."

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