10th Dec 2016 08:33
LONDON (Alliance News) - Ancala Fornia Ltd has received some backing for its takeover of Dee Valley Group PLC after a Dee Valley Employee Forum publicly stated it does not support the higher, rival takeover offer tabled by Severn Trent PLC.
Ancala and Severn Trent are both vying to take control of the last water-only company to be listed in London. Ancala's offer is 7.0% below the offer made by Severn Trent, but the investment firm has received irrevocable undertakings from 40.38% of Dee Valley shareholders and only needs to breach the 50% mark for its offer to go through.
Severn Trent's offer needs support from 75% of Dee Valley voting shareholders and a majority by number.
Dee Valley, as a company, originally recommended the offer from Ancala but soon withdrew that support in favour of Severn Trent following the rival offer. Dee Valley's last show of support was still for Severn Trent's offer. However, there has since been a revolt against the Severn Trent offer by its employees.
On Thursday, Dee Valley posted a statement concerning talks with its employees union about the takeover situation.
From an operational point of view, Severn Trent argues it is well suited to takeover Dee Valley due to its existing operations while Ancala has vowed to leave Dee Valley as it is. Ancala is run by Managing Partner Spence Clunie, who was responsible for the acquisition and subsequent securitisation of Thames Water and the acquisition and refinancing of Wales & West Utilities.
Dee Valley's Employee Forum said Thursday that "only four employees" supported the offer made Severn Trent.
"On this basis, the employee forum believes that it has a clear mandate to reply to the offer on behalf of the employees of Dee Valley Water. This summary opinion has been posted on the company Internet. The opinion has been compiled in good faith," said Dee Valley.
"Following the consultation, the employees of Dee Valley Water do not support the offer made
by Severn Trent Water Ltd. This document expresses the opinions around the threat to
employment at the Wrexham and Chester sites. Other areas of concern relating to the level
of customer service and the effect on the local economy have not been addressed in this
opinion," said Dee Valley late Thursday.
The concerns over the Severn Trent offer has prompted Dee Valley's employee forum to raise its objections to the Competition & Markets Authority - the UK's M&A and anti-trust regulator - asking for the offer to be referred to a stage-two investigation, which would block Severn Trent's offer if the CMA raises any significant concerns. The CMA is now investigating the "anticipated acquisition" of Dee Valley by Severn Trent, the forum said.
On Friday, Ancala jumped on the lack of appetite for Severn Trent's offer and stressed its own offer is "not being investigated by the CMA and is not, therefore, subject to the risk of a possible Phase 2 CMA referral."
"[Ancala] also highlights that its own offers for Dee Valley's Voting ordinary shares and non-voting ordinary shares remain open for acceptance and that [Ancala] remains willing to provide immediate liquidity to voting ordinary shareholders by making market purchases of voting ordinary shares at 1,706 pence per share," said Ancala.
Severn Trent's offer is for 1,825.00p per ordinary Dee Valley share and a comparable cash price of 1,713.00p for each non-voting share. Ancala's comparable cash price for non-voting shares is 1,602.00p.
Ancala's managing partner Clunie said Friday that Dee Valley shareholders concerned about the offer from Severn Trent should vote against the offer and accept the offer from Ancala.
"We strongly believe the revised Ancala Bid is the best outcome for Dee Valley's management, employees and customers and for the wider regional economy of Dee Valley," said Clunie.
By Joshua Warner; [email protected]; @JoshAlliance
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Related Shares:
Severn Trent