Five questions answered on the current takeover bid for Severn Trent

UK water company in talks over bid.

Canada's Borealis, the Kuwait Investment Authority (KIA) and the Universities Superannuation Scheme have launched a takeover bid for UK water company Severn Trent. We answer five questions on the bid.

What has the consortium offered for Severn Trent?

The companies together are believed to be willing to shell out £23 a share, valuing the company, which supplies water to more than 4.2 million households in the Midlands and mid-Wales, at £5.3bn.

Is Severn Trent considering this offer?

All the company have divulged is that the business proposal is at a very early stage; however, the consortium has until 5pm on June 11 to make a concrete offer to Severn.

What else has Severn said?

Severn, which is the largest of the 10 regulated water and sewage businesses in the UK, in a statement said:

"No proposal has been made and there can be no certainty that an offer will be made or as to the terms of any such offer, should one be forthcoming".

If Severn was to be taken over by the consortium, what would this mean?

It would mean that it is the latest water company in the UK to be snapped up by foreign investors.

The others being, Thames Water, which was purchased in 2006 for $8bn by a consortium led by the Australian bank Macquarie

Yorkshire Water owner Kelda Group was bought out a year later for $6.3bn (£4.1bn) by a consortium comprising Citigroup, Singapore sovereign wealth fund GIC, Infracapital Partners and HSBC.

What have the experts said?

Speaking to the Telegraph, Peter Atherton, an analyst at Liberum Capital, said:

"For a potential bid to be made in year three of the five-year regulatory cycle is surprising, and the bidder will be taking on considerable regulatory risk if they pay this sort of premium at this point in the cycle.”

While Severn Trent’s chief executive, Tony Wray, who announced he was stepping down just a month ago, last week told the paper:

“We are heading in the right direction,” he said. “We have more or less recovered from our dim and distant dark days. We are doing all the right things.

“It is time for me to go and do the other things I want to do in life which I have put on hold for the last eight years.”

Photograph: Getty Images

Helen Roxburgh is the online editor of Economia

Photo: Getty Images
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The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.