Dominion plans 650p power bid
Dominion Resources, the US electricity and gas company, will decide today how to proceed with a 650p a share bid for East Midlands Electricity. The offer values the British company - one of only five remaining independents in the sector - at pounds 1.3bn.
Options include a dawn raid to grab between 10 and 20 per cent of East Midlands, followed by a formal cash and shares offer. Alternatively, Dominion may delay its offer for a few days to see what action UK regulators take over CalEnergy's pounds 659m bid for Northern Electric.
But it is understood that Dominion is particularly keen to proceed with the offer for East Midlands as it fits in with the company's long-term strategy.
The company has also been impressed by the quality of East Midands' management, which has reduced costs in the business since privatisation six years ago.
Dominion has been stalking East Midlands for three months but had to wait for clearance from Dominion's local regulatory authority in the US before proceeding with an offer.
That clearance came two weeks ago, and this weekend the board has been meeting at the company's headquarters in Richmond, Virginia, with advisers from SBC Warburg and Wasserstein Perella to finalise details of the offer.
Thomas Capps, Dominion's chairman and chief executive, is anxious to differentiate the company's market and cash position from that of CalEnergy in the hope that Ian Lang, the President of the Board of Trade, will find it hard to refer Dominion to the Monopolies and Mergers Commission on public interest grounds.
On Wednesday, Dominion released a statement confirming its interest in East Midlands but said its offer would not be "much in excess" of 608p a share. East Midlands subsequently advised shareholders to reject any bid at that level, and Dominion is believed to have upped its offer in the hope of getting the East Midlands board to support its bid.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies