The result, which remained on a knife-edge to the end, was almost swung in Northern's favour by the Prudential's move to buy shares in the company in support of the existing management from investors who had previously accepted the US bid.
By the close of the extended offer deadline of 1pm on Christmas Eve, CE Electric spoke for 50.30 per cent of Northern shares, a small increase on the 50.13 per cent support declared on Monday.
Victory for CE Electric followed the Takeover Panel's decision to reject an appeal by Northern against the deadline extension. Had the company won the appeal, CE Electric would have lost the battle, having gained only 49.77 per cent of shares by the original closing deadline of 1pm last Friday.
Northern has apparently decided to accept defeat and will not to seek to challenge the appeal result in the courts.
The buying spree by the Prudential on Christmas Eve netted more than 900,000 Northern shares at 650p a share, the same price as CE's all-cash offer. It represented a stake of 0.8 per cent, raising the Prudential's shareholding in Northern to more than 12 per cent. Sellers are thought to have included Fleming Investment Management, Commercial Union, Equitable Life and UBS, the Swiss banking group.
Salomon Brothers, the US investment bank, denied suggestions it had sold a stake to the Prudential. A spokesman said the bank did not hold Northern shares.
Defending its action, a Prudential spokesman said: "Our interest is in shareholder value. We have agreed with the board of Northern and many independent commentators that 650p is too low. If an offer were to be made at the right price we would expect the board of Northern to recommend the offer."
Though the result spells the end of another epic struggle by David Morris, Northern's chairman, who fended off a bid by Trafalgar House, the inquest into the defence tactics employed by the company and its brokers BZW is far from over. BZW faces an investigation by the Takeover Panel into the controversial pounds 250,000 "performance" fee agreed with Northern.
The panel will try to establish why BZW did not move to alert it of the arrangement until last Thursday night, the day after it bought 2.3 per cent of the company's shares in an attempt to boost its bid defence.
A BZW spokesman maintained the fee was in no way related to success or failure of the Northern defence, and that "strenuous" efforts had been to contact panel officials about the fee on Thursday evening.
In another development, it has emerged that the pounds 250,000, which is on top of a flat-rate fee to BZW of around pounds 1.5m, could be blocked permanently by the panel. It had been frozen pending the outcome of Northern's appeal.
As he headed back to the US for Christmas, David Sokol, chairman of power generator CalEnergy, which controls CE Electric, said he was delighted with the outcome. He said: "We think this is a victory for the majority in face of considerable odds. We now look forward to returning the company to its more normal business of serving its customers."
Though Mr Sokol was seeking an orderly handover of power at Northern's Newcastle headquarters, a wholesale clearout of board directors was now in prospect. Only Ron Dixon, the commercial director, has been asked to stay on at the company, but is thought to have expressed a wish to leave.
However, Northern's board will not disappear empty-handed. Executive directors, who were on two-year rolling contracts, are likely to receive pay-offs totalling more than pounds 2m.
Mr Morris, who earned total pay last year of pounds 296,000, including pension contributions, could see a pay-off of some pounds 600,000. In addition, Mr Morris will make pounds 39,635 from share options. Tony Hadfield, chief executive, earned pounds 374,000 last year and could receive a pay-off of more than pounds 600,000.
Unions want to meet with Mr Sokol to clarify the future for the company's 3,600 staff.
n BZW has asked us to point out that fees of pounds 1.5m and pounds 250,000 in connection with its defence of Northern Electric were agreed in writing by Northern on 27 November. BZW said it found the suggestion in The Independent on 24 December that it had last week "asked for" the pounds 250,000 to be paid "very misleading" and wanted to make this position clear.Reuse content