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BUZZ-Water utilities: investors tap into bid & earnings potential

Reuters - UK Focus

** Water utilities lifted by ongoing bid speculation & bullish view on earnings

** United Utilities (LSE: UU.L - news) hits lifetime high, up 1.4 pct, with Severn Trent (Other OTC: STRNY - news) at its highest since June 2013, up 2 pct; fifth-top & top performers on FTSE 100 respectively

** Extend gains seen Tuesday on positive note from StarMine 4-star rated broker Deutsche Bank (Xetra: 514000 - news) .

** Deutsche says with final regulatory determinations due next month and cos likely to announce new dividend policies early 2015, there should soon be 5 yrs of revenue & dividend visibility for UK water utilities

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** Says while uncertainties around regulatory reviews often lead to hiatus in bid activity, there is clear trend of listed water cos being acquired by infrastructure funds

** Reckons bidder could pay up to 25 pounds a share for Severn & up to 12 pounds/share for UU

** Notes about 50 pct of regulated UK water industry assets already owned by infrastructure funds

** Severn also buoyed by HSBC upgrade to "neutral" vs "underweight"; highlights co's debt mgmt & regulatory outperformance potential (RM (LSE: RM.L - news) : tricia.wright1.thomsonreuters.com@reuters.net)