UPDATE 2-Bidder for UK's Severn Trent threatens to walk away

Mon Jun 10, 2013 6:25am EDT
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* Severn Trent rejected 2,200 pence/share offer late Friday

* Two major shareholders urge Seven Trent to engage in talks

* Shares fall 5.9 pct

By Anjuli Davies and Chris Vellacott

LONDON, June 10 (Reuters) - The Canadian-led consortium trying to buy Britain's Severn Trent threatened to walk away after its third approach was rejected, prompting two of the water utility's major shareholders to urge a return to talks.

Shares in the British company dropped almost 6 percent on Monday after it rejected the consortium's proposed $8.2 billion offer, ahead of a deadline on Tuesday for a firm bid.

Borealis Infrastructure, part of Canadian pension fund OMERS, a Kuwaiti sovereign wealth fund and Britain's Universities Superannuation Scheme want to buy Severn Trent for its steady cash flows.

But the utility, which has 7.7 million customers mainly in central and western England and Wales, said the latest offer of 2,200 pence per share failed to reflect its long-term value and future potential.

A source close to the consortium told Reuters that no talks had been held since May 14.   Continued...