Severn Trent rejects takeover approach from Kuwait Investment Authority and Canada's Borealis The FTSE 100 company, which supplies water to more than 4.2m households, met with Canada's Borealis, the Kuwait Investment Office and the Universities Superannuation Scheme on Monday, causing Severn Trent's shares to jump 14pc. At that meeting, a conditional proposal was tabled by the Consortium at only a modest premium to the share price before the announcement of May 14. The board of Severn Trent has reviewed the proposal with its advisers and concluded that it completely fails to recognise the existing and potential value of Severn Trent," the company said. The water sector is regulated in five-year blocks that determine companies" investment plans and the prices they can charge. The details of their plans for the second half of the decade will be determined over the next two years. Peter Atherton, an analyst at Liberum Capital, said: "For a potential bid to be made in year three of the five-year regulatory cycle is surprising, and the bidder will be taking on considerable regulatory risk if they pay this sort of premium at this point in the cycle. Goldman Sachs analysts said the review by regulator Ofwat was the main "downside risk" to M&A but noted that "none of the previous approaches in the water sector that have been announced in the last 10 years has failed in taking over the water company." But analysts at Citi said they expected a formal bid would materialise.