A legally unprecedented move by a Dee Valley Water small shareholder has left Severn Trent Water’s bid to acquire water only firm undecided despite Severn Trent’s win of more than 87% of shareholder votes by value at this week’s shareholder meeting. The outcome is expected to be decided at a court hearing on 25 January.
A Dee Valley shareholder transferred about 445 voting shares to more than 400 individuals ahead of the court meeting held on 12 January to hear the shareholders vote on the Severn Trent offer. That transfer potentially increased substantially the number of shareholders who would vote to reject the Severn Trent bid. But the court deferred a decision on whether to count the 445 transferred votes to a second court hearing.
Severn Trent took some 87% of the vote by value and, discounting the transferred votes, nearly 92% of the shareholder votes. That would have easily satisfied the requirement under the Scheme of Arrangement route chosen by Severn Trent for its bid. Under the scheme It needed only 75% by value plus anything over 50% by number to win the day. But were the transferred votes included the shareholder poll for Severn Trent would be less than 44% meaning its bid would be rejected.
THE WATER REPORT understands that the share transfer move was without legal precedent. So the verdict will be left to a court hearing scheduled now for 25 January. That so-called Scheme Court hearing normally would have been used to ratify the earlier court and general meeting outcomes under the Scheme of Arrangement route. The original date for the hearing was 18 January but the judge at this week’s postponed it after a group of small investors requested an extension. And Dee Valley has agreed to pay “reasonable legal costs “ for those small shareholders to ensure they are well represented in the Scheme Court.
The Severn Trent bid for Dee Valley was 1,825 pence a share, trumping an earlier 1,706 pence a share offer by investment manager Ancala. The deadline for Ancala’s Open Offer bid – which requires only a simple majority vote based on share value runs out today (13th January).