City shock as Lang clears all three bids
Electricity: Shares soar as decision signals open season on remaining regional companies
Friday 01 September 1995
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)
- 1 Germanwings crash: Police make 'significant discovery' at home of co-pilot Andreas Lubitz
- 2 Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
- 3 Zayn Malik already working on solo material, just days after quitting One Direction
- 4 The West has it totally wrong on Lee Kuan Yew
- 5 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Zayn Malik gives first interview since quitting One Direction: 'I've never felt more in control of my life'
Germanwings crash: Police make 'significant discovery' at home of co-pilot Andreas Lubitz
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Saudi Arabia says it won't rule out building nuclear weapons
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Andreas Guenter Lubitz intentionally crashed flight 9525 into the Alps in act of mass murder and suicide – latest
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...