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 six per cent yesterday after it rejected the consortium's proposed $8.2 billion offer, ahead of a deadline today 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 said no talks had been held since May 14.

One of Severn Trent's 10 biggest shareholders said yesterday the company should start engaging with the consortium with the aim of achieving an offer of more than 2,300 pence per share. "We certainly encourage them to engage and protect the rights of shareholders," the investor said.

"(But) any price below 2,300 pence per share isn't worth being considered. Let them walk away, they don't deserve assets at this price."

Severn Trent has stable cash flows and operates in a favourable regulatory environment.

Borealis president and chief executive, speaking on behalf of the consortium, said Severn Trent had shown no interest in discussing its latest proposal.

"In the absence of any such engagement, there will be no further proposal from the consortium and no offer for Severn Trent shareholders to consider," he said.

According to British takeover rules, the consortium has until 1600 GMT today to make a formal offer for Severn Trent or walk away.

Severn Trent chairman Andrew Duff said the board had acted in the best interest of shareholders in rejecting the latest offer, which it said was only 3.5 per cent higher than the previous approach.-Reuters