CE wins Northern takeover battle

Northern Electric, the Tyneside regional power supplier, has lost its fight against the pounds 782m hostile takeover bid by US-owned CE Electric by the narrowest of margins and in almost unprecedented circumstances, following extraordinary last-minute support from the company's biggest investor, the Prudential.

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.

voicesSiobhan Norton on why she eventually changed her mind
Life and Style
fashion Designs are part of feminist art project by a British student
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
Scottish singer Susan Boyle will perform at the Commonwealth Games opening ceremony in Glasgow
commonwealth games
Lane Del Rey performing on the Pyramid Stage at Glastonbury 2014
people... but none of them helped me get a record deal, insists Lana Del Rey
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

PMO Analyst - London - Banking - £350 - £400

£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Test Lead - London - Investment Banking

£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn