All eyes turned to Northern Electric, whose shares rose an initial 57p, but fell back to close 23p up at 838p, on the likelihood that Trafalgar House would now re-bid.
But other companies, notably Yorkshire and Southern Electric, are also favourite takeover targets. "All the electricity companies are attractive," said Donna Lury, analyst at Nikko Europe.
Takeover interest in the cash-rich electricity companies was put on hold in March when the industry regulator unexpectedly announced that their pricing regime would be reviewed.
The price review is not as harsh as some people expected, though Philip Green, analyst at Lehman Brothers, believed the price controls continued to favour the smaller companies.
Shares in Southern Electric were up 23p to 698p, after first reaching 716p, on the belief it had done well out of the review and that Tomkins could have the company in its sights.
South Western Electricity and Swalec, two of the smallest regional electricity companies, were also tipped as targets. However, it was also believed the two were talking to each other about a defensive merger.
Market speculation yesterday was linking Hanson, off 1p to 231p, with a bid for Yorkshire Electricity. Lord Hanson is known to be seeking a large acquisition. The company, which considered buying the Government's stake in Powergen five years ago, was "a definite player,'' one analyst said.
But he also saw Yorkshire as a possible white knight for Northern Electric against Trafalgar, or even a merger candidate for Midlands Electricity.
Despite attempts to toughen the pricing regime, the electricity companies are still regarded by possible predators as cash cows, whose managements have failed realise the cost-cutting potential.Reuse content