City questions price of ScotPower's US deal

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SHARES IN ScottishPower fell 10 per cent yesterday as the market questioned whether the group overpaid in buying the US utility PacifiCorp for pounds 4.2bn, writes Michael Harrison.

The all-share deal turns ScottishPower into one of the world's 10 leading utility companies, but leave it with pounds 5.5bn of debt and a pounds 1.9bn goodwill write-off.

Ian Robinson, ScottishPower chief executive, said the deal would be earnings- enhancing from the first full year.

The transatlantic deal will be accompanied by a pounds 500m share buyback. Analysts also expect ScottishPower to speed up flotation of its Scottish Telecom subsidiary, worth pounds 1.2bn.

The group brushed aside prospects of a rival cash bid for Oregon-based PacifiCorp. It said that although this is the first foreign takeover of a US utility, it expected regulatory clearance within six months. Some analysts believe approval will take 12 to 18 months. Mr Robinson will be chief executive of the enlarged group.

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