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.

Start your day with The Independent, sign up for daily news emails
Life and Style
A monstrous idea? Body transplants might no longer be science fiction
Science An Italian neurosurgeon believes so - and it's not quite as implausible as it sounds, says Steve Connor
Demba Ba (right) celebrates after Besiktas win on penalties
footballThere was no happy return to the Ataturk Stadium, where the Reds famously won Champions League
Arts and Entertainment
Natural beauty: Aidan Turner stars in the new series of Poldark
arts + ents
Mia Freedman, editorial director of the Mamamia website, reads out a tweet she was sent.
arts + ents
Arts and Entertainment
The write stuff: masters of story-telling James Joyce, left, and Thomas Hardy
arts + ents...begging to differ, John Walsh can't even begin to number the ways
Jose Mourinho on Sky Sports
footballEXCLUSIVE COLUMN Paul Scholes: It was not a leg-breaking tackle, as the Chelsea manager had claimed
ebooksA special investigation by Andy McSmith
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

Recruitment Genius: Telesales / Marketing Executive - B2B - OTE £25,000

£17000 - £25000 per annum: Recruitment Genius: An opportunity to join this new...

SThree: Trainee Recruitment Consultant

£18000 - £21000 per annum + OTE £45,000: SThree: SThree Group have been well e...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Recruitment Genius: Business Control Manager

£36000 - £44000 per annum: Recruitment Genius: Encouraging more businesses to ...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower