Bid fear grips power

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The Independent Online

Economics Correspondent

The electricity sector braced itself for new takeover bids after intense speculation sent shares higher on Friday. The possibility of an impending government announcement on references of bids to the Monopolies and Mergers Commission was seen as an obstacle, and could lead to the delay of firm offers. However, senior industry sources expect the Government to stick to its case-by-case approach.

London Electricity has put in place its plans to respond to an offer, although its chairman, Sir Bob Reid, told the annual meeting on Friday the company was not in talks. But Pacific Gas & Electricity, a US utility, was rumoured as a potential bidder.

Yorkshire and East Midlands are also seen as attractive targets. Their shares rose, along with those of Seeboard and South Wales, at the end of last week in the expectation that the companies most vulnerable to bids would return cash to their shareholders.

At an extraordinary meeting on 16 August Northern Electricity will seek approval for its plans to give shareholders a pounds 1 special dividend and preference shares worth pounds 1.