Buyouts in U.K. Water Unlikely Except Severn, Credit Suisse Says

Buyouts in Britain’s water sector are unlikely though Severn Trent Plc, one of the U.K.’s three publicly traded water companies, is considered the “most likely candidate,” Credit Suisse Group AG analysts said.

“Capital-rich sovereign wealth funds are likely to pursue further acquisitions in the unlisted space, in our view, but we do not expect appetite for large-scale hostile buyouts,” Credit Suisse analysts including Guy MacKenzie said in a report today.

“If a buyout were to take place, we would view Severn Trent as the most likely candidate owing to its small size compared with” Warrington-based United Utilities Plc and low downside risk from price control reviews being proposed for 2014, the report said. United Utilities “would be the least likely candidate in our view.”

Recent U.K. water sector transactions have been relatively small-scale and privately negotiated. “We do not view these as precursors to large-scale takeovers,” the note said.

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