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

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Metro mayors can help Labour return to government

Labour champions in the new city regions can help their party at the national level too.

2017 will mark the inaugural elections of directly-elected metro mayors across England. In all cases, these mayor and cabinet combined authorities are situated in Labour heartlands, and as such Labour should look confidently at winning the whole slate.

Beyond the good press winning again will generate, these offices provide an avenue for Labour to showcase good governance, and imperatively, provide vocal opposition to the constraints of local government by Tory cuts.

The introduction of the Mayor of London in 2000 has provided a blueprint for how the media can provide a platform for media-friendly leadership. It has also demonstrated the ease that the office allows for attribution of successes to that individual and party – or misappropriated in context of Boris Bikes and to a lesser extent the London Olympics.

While without the same extent of the powers of the sui generis mayor of the capital, the prospect of additional metro-mayors provide an opportunity for replicating these successes while providing experience for Labour big-hitters to develop themselves in government. This opportunity hasn’t gone unnoticed, and after Sadiq Khan’s victory in London has shown that the role can grow beyond the limitations – perceived or otherwise - of the Corbyn shadow cabinet while strengthening team Labour’s credibility by actually being in power.

Shadow Health Secretary and former leadership candidate Andy Burnham’s announcement last week for Greater Manchester was the first big hitter to make his intention known. The rising star of Luciana Berger, another member of Labour’s health team, is known to be considering a run in the Liverpool City Region. Could we also see them joined by the juggernaut of Liam Byrne in the West Midlands, or next-generation Catherine McKinnell in the North East?

If we can get a pantheon of champions elected across these city regions, to what extent can this have an influence on national elections? These new metro areas represent around 11.5 million people, rising to over 20 million if you include Sadiq’s Greater London. While no doubt that is an impressive audience that our Labour pantheon are able to demonstrate leadership to, there are limitations. 80 of the 94 existing Westminster seats who are covered under the jurisdiction of the new metro-mayors are already Labour seats. While imperative to solidify our current base for any potential further electoral decline, in order to maximise the impact that this team can have on Labour’s resurgence there needs to be visibility beyond residents.

The impact of business is one example where such influence can be extended. Andy Burnham for example has outlined his case to make Greater Manchester the creative capital of the UK. According to the ONS about 150,000 people commute into Greater Manchester, which is two constituency’s worth of people that can be directly influenced by the Mayor of Greater Manchester.

Despite these calculations and similar ones that can be made in other city-regions, the real opportunity with selecting the right Labour candidates is the media impact these champion mayors can make on the national debate. This projects the influence from the relatively-safe Labour regions across the country. This is particularly important to press the blame of any tightening of belts in local fiscal policy on the national Tory government’s cuts. We need individuals who have characteristics of cabinet-level experience, inspiring leadership, high profile campaigning experience and tough talking opposition credentials to support the national party leadership put the Tory’s on the narrative back foot.

That is not to say there are not fine local council leaders and technocrats who’s experience and governance experience at vital to Labour producing local successes. But the media don’t really care who number two is, and these individuals are best serving the national agenda for the party if they support A-listers who can shine a bright spotlight on our successes and Tory mismanagement.

If Jeremy Corbyn and the party are able to topple the Conservatives come next election, then all the better that we have a diverse team playing their part both on the front bench and in the pantheon of metro-mayors. If despite our best efforts Jeremy’s leadership falls short, then we will have experienced leaders in waiting who have been able to afford some distance from the front-bench, untainted and able to take the party’s plan B forward.