The stock dropped from a £19.37 high at the close of trading last night and opened at £17.50 on the opening of the London Stock Exchange this morning.
Severn Trent stock then rallied at noon today to reach £17.77 per share a fall of 8.28% from last nights close.
The shift in share price follows last night’s decision of bidder the LongRiver consortium to walk away from the biding process for the water utilities company.
The consortium, consisting of Canadian investment fund Borealis Infrastructure, the Kuwait Investment Office and Britain’s Universities Superannuation Scheme, walked away from the bid process after “put up or shut up” deadline of 5pm last night (11 June) from The Takeover Panel passed.
This followed a third bid of £5.3bn that was turned down by Severn Trent on Friday (7 June).
The third offer had been tabled after a previous bid of £21.25 per share valuing the company at £4.96bn had also been rejected.
A statement from LongRiver, released last night, said: “Having reviewed all publicly available information available to it on the company, and in the absence of any meaningful engagement with the Severn Trent Board, LongRiver will not increase its pre-conditional offer.”
The consortium will now not be able to make another bid for at least six months due to Takeover Panel rules.
In a statement from Andrew Duff, the chairman of Severn Trent released last night, he said: “We have every confidence in the long-term future and significant value of Severn Trent and look forward to continuing to deliver for all of our shareholders, customers and other stakeholders.”
Clive Roberts, S&P Capital IQ equity research analyst, said: “Severn Trent stated that it had not been contacted by LongRiver after 7 June and that the consortium appeared unable or unwilling to bridge the “value gap” and make an offer reflecting the “long-term value and potential” of the group.
“We still think there is value in the company, so we have a ‘hold’ recommendation on Severn Trent stock.”