Severn Trent to buy Dee Valley Water

Severn Trent has announced it will buy rival water company Dee Valley Water in a deal worth £78.5 million.

Severn Trent said Dee Valley was a “natural fit”, as it operates in neighbouring areas in England and Wales. It will pay 1,705 pence in cash per share for the company, which supplies approximately 62 million litres per day to more than 258,000 customers.

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

Severn Trent is undertaking an investment programme of more than £3 billion in AMP6, and said it intends to fully support continued investment in infrastructure in the Dee Valley region.

Commenting on the acquisition, Severn Trent chief executive Liv Garfield 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.”

Dee Valley chairman Jon Schofield 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.”

This article first appeared in Utility Week.