Dee Valley Water To Be Sold To Severn Trent PLC For £78.5m

Dee Valley Group PLC is to be acquired by Severn Trent PLC for £78.5 million, winning a battle to take over the company.

A month ago the company had agreed a £71m deal with Ancala Fornia Limited, however today it has been announced that the company is being sold elsewhere in a precisely 10% better deal with Severn Trent.

Dee Valley Water has said the recommendation for the Ancala Fornia bid has been withdrawn with a new recommendation for Severn Trent’s bid.

Severn Trent say they “intend to maintain front line field force operations at Dee Valley’s current locations in Wrexham and Chester.”

Severn Trent has said it intends to maintain a separate Welsh licence for Dee Valley Group and intends for the whole of its business to be regulated under Welsh government policy.

Information this morning referred to Severn Trent looking to expand and provide value to their shareholders in this deal via economies of scale, “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.”

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.”

Commenting on the Acquisition, Jon Schofield, Chairman of Dee Valley said: “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.”

Dee Valley is the holding company for the Dee Valley Group. Dee Valley, through its trading subsidiary Dee Valley Water, which is the licensed ‘water undertaker’ for Wrexham, Chester and the surrounding areas, has been supplying water to the community for more than 150 years.

Dee Valley supplies drinking water to approximately 125,000 domestic and business customers in northeast Wales and in northwest Cheshire.

For the year ended 31 March 2016, Dee Valley Group revenue was £23.1 million and profit from operations was £6.6 million.