BACKGROUND
On 21 October 2016, it was announced that the board of Dee Valley (the “Dee Valley Board”) and the board of Ancala Fornia Limited (“Ancala”) had reached agreement on the recommended acquisition by Ancala of the ordinary voting shares of 5p each in the capital of Dee Valley (“Dee Valley Ordinary Voting Shares”) for 1,550 pence per share and the ordinary non-voting shares of 5p each in the capital of Dee Valley (“Dee Valley Ordinary Non-Voting Shares”) for 1,455 pence per share.
On 16 November 2016, it was announced that the Dee Valley Board and the board of Severn Trent had reached agreement on the recommended acquisition (to be effected by way of a scheme of arrangement) to acquire the Dee Valley Ordinary Voting Shares at a price of 1,705 pence in cash per share and a contractual offer to acquire the Dee Valley Ordinary Non-Voting Shares at a price of 1,601 pence in cash per share (the “Severn Trent Proposal”)
On 22 November 2016, it was announced that the Dee Valley Board and the board of Ancala had reached agreement on a revised recommended acquisition by Ancala of the Dee Valley Ordinary Voting Shares for 1,706 pence per share and the Dee Valley Ordinary Non-Voting Shares for 1,602 pence per share (the “Revised Ancala Proposal”).
On 23 November 2016, the board of directors of Severn Trent Water announced that it was increasing the cash offer price in respect of the Severn Trent Proposal (the “Revised Acquisition”).
Under the terms of the Revised Acquisition, the holders of Dee Valley Ordinary Voting Shares (“Dee Valley Ordinary Voting Shareholders”) will receive 1,825 pence in cash for each Dee Valley Ordinary Voting Share held. The Revised Acquisition includes a revised comparable cash offer for the Dee Valley Ordinary Non-Voting Shares priced at 1,713 pence per share, in accordance with Rule 14 of the Takeover Code (the “Revised Severn Trent Contractual Offer“).
It is intended that the Revised Acquisition of the Dee Valley Ordinary Voting Shares will be implemented by means of a court-sanctioned scheme of arrangement of Dee Valley under Part 26 of the Companies Act 2006 (the “Revised Scheme”). The Revised Acquisition values the entire issued share capital of Dee Valley at approximately £84.0 million.
RECOMMENDATION TO DEE VALLEY ORDINARY SHAREHOLDERS
The Dee Valley Board considers that the Revised Acquisition represents a superior offer in terms of financial value for holders of Dee Valley Ordinary Voting Shares and Dee Valley Ordinary Non-Voting Shares (“Dee Valley Ordinary Shareholders”) as compared with the Revised Ancala Proposal and believes that Dee Valley Ordinary Shareholders should have the opportunity to consider the Revised Acquisition.
The Dee Valley Board has therefore withdrawn its recommendation of the Revised Ancala Proposal.
Accordingly, the Dee Valley Board intends to recommend unanimously that:
– all Dee Valley Ordinary Voting Shareholders vote in favour of the Revised Scheme in respect of the Dee Valley Ordinary Voting Shares; and
– all holders of Dee Valley Ordinary Non-Voting Shares (“Dee Valley Ordinary Non-Voting Shareholders”) accept the Revised Severn Trent Contractual Offer in respect of their Dee Valley Ordinary Non-Voting Shares.
The Dee Valley Board, which has been so advised by Investec as to the financial terms of the Revised Acquisition, considers the terms of the Revised Acquisition to be fair and reasonable. In providing its advice, Investec has taken into account the commercial assessments of the Dee Valley Board.
IMPLEMENTATION OF THE REVISED ACQUISITION
The Dee Valley Board intends to work with Severn Trent Water in implementing the Revised Scheme as soon as reasonably practicable after the date of this announcement.
Further details of the Revised Scheme and Revised Severn Trent Contractual Offer, including the full terms and conditions of each and an indicative timetable, will be contained in the scheme circular to be sent to Dee Valley Ordinary Shareholders setting out, amongst other things, (i) the Revised Scheme and notices convening the requisite court meeting and the general meeting and (ii) the terms and conditions of the Revised Severn Trent Contractual Offer, and specifying the necessary actions to be taken by Dee Valley Ordinary Shareholders, which will be sent to Dee Valley Ordinary Shareholders in due course.