An activist investor has transferred hundreds of shares in water firm Dee Valley to local people and employees in a bid to stage a coup over a potential takeover.

The Mail understands the shareholder, believed to be a Dee Valley employee, bought shares in the company in early December and shortly afterwards transferred 445 of them to individuals.

Dee Valley, which supplies more than 258,000 customers in North-East Wales and the North-West, has had a takeover bid by Severn Trent Water approved following a long-running bidding war with investment fund Ancala Fornia.

The £84million deal has the backing of Dee Valley's board but has been strongly opposed by locals in North Wales and Chester.

Dee Valley, which supplies more than 258,000 customers in north-east Wales and the north-west, has had a takeover bid by Severn Trent Water approved

It is feared Severn Trent's ownership will lead to job losses, less use of local contractors, and worse customer service.

It is thought the mystery investor handed out the stock to encourage a high turnout at a shareholder meeting due to be held today.

Last night the board was scrambling to see if the attempted coup was legal, with a High Court hearing scheduled for January 18 to decide whether the transferred shareholders' votes should count.

In the meantime, the vote as scheduled will take place today, but could be overruled.

'It has come to the attention of the Dee Valley board that a series of approximately 445 recent transfers of small holdings in voting ordinary shares have taken place which may distort the outcome of the shareholder vote at the court meeting convened in connection with the scheme,' Dee Valley said yesterday.

Its board thinks a court should decide on the validity of the transferred shareholders' votes.

Under normal takeover rules every shareholder gets one vote per share. So larger shareholders are able to reject takeover bids.

The largest shareholder in Dee Valley is investment giant Axa with 1.06m, a 25.5 per centstake.

The 445 people handed shares have only one each. But according to a scheme of arrangement for Dee Valley, the takeover can only happen if approved by 75 per cent of total voting shares and, crucially, of individual shareholders.

As a result, the several hundred new shareholders have the power to stall the bid unless the High Court weighs in.

Plaid Cymru's North Wales Assembly Member Llyr Gruffydd, who is campaigning for the company to remain independent, said: 'It's vital that small shareholders turn up and are not frightened of exercising their democratic right to vote.'

In November, Wrexham's Labour MP Ian Lucas also expressed concern about the takeover.

The battle over Dee Valley started in October when Ancala had a £78.5mililon bid accepted before it was trumped by an £84million offer from Severn Trent.