Severn Trent has been approached about a takeover bid by a group of foreign companies. The deal could be worth a whopping £5 billion.
Severn Trent is one of the biggest water companies in the country and supplies 7.7 million people with drinking water across the Midlands and Wales.
The Severn Trent bid
The group involved with the bid include the Canadian investment group Borealis, which already owns assets in the UK, the Kuwait Investment Office and the Universities Superannuation Scheme.
A statement was issued confirming the proposed takeover, although acceptance of the £5 billion bid has not been confirmed.
It said: "This approach is at a very early stage, no proposal has been made and there can be no certainty that an offer will be made or as to the terms of any such offer, should one be forthcoming."
After this announcement shares in the company jumped more than 18% to a record high before falling back again.
More details will be announced on the 11th June when the offer will either be confirmed or extended.
Customers are unlikely to see a difference if the takeover does go ahead because prices are under the control of water regulator Ofwat.
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UK water companies in foreign hands
Severn Trent is just one of several utilities companies now under foreign control. This is because utility companies have proved to be a strong investment, as they're a good way to receive a steady income.
After the UK water industry was privatised in 1989 several new companies were formed and many of these have now been sold off.
In 2006 Thames Water was bought by a consortium which included the Australian investment group Macquarie and a Chinese wealth fund.
Yorkshire Water, which now supplies 4.7 million people, was snapped up in 2007 by another consortium, this time made up of Citigroup, HSBC, and the Singaporean sovereign wealth fund GIC.
Northumbria Water was also bought in 2011 by the Hong Kong-based company Cheung Kong Infrastructure Holdings.
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Where your water company is based
The table below shows which water companies are owned by overseas investors. There are now 12 water companies, out of the 23 in the UK, which have foreign owners not including the proposed Severn Trent deal.
|Water company||British or overseas ownership||Who owns it?|
|Affinity Water (formerly Veolia Water Central, Veolia Water East, Veolia Water Southeast)||Overseas||US-based Morgan Stanley and UK-based Infracapital (investment fund managed by M&G).|
|Anglian Water (includes Hartlepool Water)||Overseas|
Osprey Acquisitions Limited - a consortium of several companies based in the UK, US and Canada
|Bristol Water||Overseas||Split between Canada-based Capstone Infrastructure, Spain-based Grupo Agbar and Japan-based Itochu Corporation|
|Cambridge Water||Overseas||Hong Kong-based Cheung Kong Infrastructure Holdings|
|Cholderton and District Water||British||Independent water company|
|Dee Valley Water|
|Independent water company|
|Dwr Cymru Welsh Water||British||UK-based Glas Cymru|
|Essex and Suffolk Water||Overseas||Hong Kong-based Cheung Kong Infrastructure Holdings|
|Northern Ireland Water||British||Government-owned company|
|Northumbrian Water||Overseas||Hong Kong-based Cheung Kong Infrastructure Holdings|
|Portsmouth Water||British||UK-based South Downs Capital Ltd|
|Scottish Water||British||Government-owned company|
|Sembcorp Bournemouth Water (formerly Bournemouth and West Hampshire Water)||Overseas||Singapore-based Sembcorp|
|Severn Trent Water|
|Severn Trent Plc|
|South East Water||Overseas||Canada-based CDPQ and Australia-based Utilities Trust of Australia|
|South Staffs Water||Overseas||US-based KKR|
|South West Water||British||UK-based Pennon Group|
|Southern Water||British||UK-based Southern Water Capital Limited|
|Sutton and East Surrey Water||British||UK-based East Surrey Holdings Limited|
|Thames Water||Overseas||Australia-based Kemble Water Holdings Ltd, part of the Macquarie group|
|United Utilities||British||Independent water company|
|Malaysia-based YTL Corporation|
|Yorkshire Water||Overseas||Citigroup, HSBC, and Singapore-based GIC|
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