City shock as Lang clears all three bids

Electricity: Shares soar as decision signals open season on remaining regional companies

MARY FAGAN

Industrial Correspondent

The Government declared open season on Britain's electricity companies yesterday when it cleared the trio of current takeover bids from any official investigation.

The industry took the decision from Trade Secretary Ian Lang, his first important policy statement since taking office,as a signal that the remaining nine regional electricity companies were up for grabs.

In the stock market, electricity shares soared on a day when most shares dropped sharply.

But the decision not to refer the bids to the Monopolies and Mergers Commission was attacked as "disgraceful" by Labour and criticised by the National Consumer Council, which called for urgent action to ensure that the rights of customers will not be compromised.

Brian Wilson, Labour's trade and industry spokesman, called the decision a slap in the face for consumers and predicted "an orgy of takeovers" over coming months. "It will now be very difficult to reverse the view that there is a free-for-all out there," he said.

"This demonstrates the Tory view that all decisions that matter are able to be taken by directors and shareholders with no thought for consumers. The characteristic of all these three bids is that they offer nothing to the customer and Mr Lang has not even attempted to change that."

Clearance had been expected for the pounds 1.1bn bid for South Western Electricity by Southern Electric International of the US and for the pounds 2.5bn proposed takeover of Eastern Electricity by Hanson. But City analysts were shocked at the decision not to refer Scottish Power's pounds 1bn hostile bid for Manweb, which is the first within the industry.

Manweb's shares surged to pounds 9.71 from pounds 8.78 yesterday, compared with Scottish Power's cash alternative of pounds 9.15.

John Roberts, Manweb's chief executive, vowed to continue the fight against the predator. He said that the company had "had approaches" from potential white knights but saw no need of one. "The chances of us remaining independent are now better than ever. The share price now shows how mean the Scottish bid is," he said.

Scottish Power, whose cash-plus-shares alternative is now worth about pounds 9.81, said it welcomed the Government's decision and awaited the final defence package from the UK firm.

The clearance of the Manweb takeover is also seen as a rebuff for Professor Stephen Littlechild, the electricity regulator. Professor Littlechild wanted the Scottish bid referred on the grounds that it would reduce the number of companies between which he can make comparisons - a key factor in his approach to regulation.

Professor Littlechild said that the decision was disappointing but he would now discuss conditions to ensure that the operations of Scottish Power and Manweb were kept as separate as possible. Among the undertakings required from Scottish Power is that it will not sell power from its generating arm to the monopoly supply business of Manweb.

Ian Lang, President of the Board of Trade, said he had received assurances from Southern, Hanson and Scottish Power that they would address all regulatory concerns.

The undertakings by the companies reveal that Scottish Power is committed to Manweb selling its stake in the National Grid Company - owned by all 12 regional firms but scheduled for a pounds 4bn flotation within months. But no such assurance is given by Hanson or SEI, in spite of the Government view that the companies should dispose of their grid shares.

Mr Lang acknowledged the likelihood of further takeover attempts and promised to consider each case on its merits, referring them to the MMC only on competition grounds. He said that RECs should be subject to the normal disciplines of the market, including mergers.

Shares throughout the sector rose sharply with increasing speculation over more takeover bids. London Electricity, Norweb and South Wales Electricity have long been rumoured as the most likely potential targets. The list of possible predators includes several US groups as well as European companies such as Germany's RWE.

Separately, it emerged that Hanson has acceptances for more than 50 per cent of Eastern's shares and has extended the deadline to 15 September.

Comment, page 21

The hunters... and the hunted

Houston Industries (US

Pacific Gas & Electricity (US)

Entergy (US)

RWE (Ger)

Start your day with The Independent, sign up for daily news emails
Life and Style
Living for the moment: Julianne Moore playing Alzheimer’s sufferer Alice
health
Voices
A propaganda video shows Isis forces near Tikrit
voicesAdam Walker: The Koran has violent passages, but it also has others that explicitly tells us how to interpret them
News
people
Life and Style
love + sex
News
people
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle 0 Man United 1: Last minute strike seals precious victory
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
News
Benjamin Netanyahu and his cartoon bomb – the Israeli PM shows his ‘evidence’
people
News
i100
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
80s trailblazer: comedian Tracey Ullman
tv
Arts and Entertainment
Stephen Tompkinson is back as DCI Banks
tvReview: Episode one of the new series played it safe, but at least this drama has a winning formula
Arts and Entertainment
Jeffrey Archer holds up a copy of 'Kane and Abel', a book he says was ripped-off by Bollywood
books
Life and Style
food + drink
Arts and Entertainment
Fay Weldon suggested authors should tailor their work for Kindle readers
books
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers