Dominion targets East Midlands

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The Independent Online
East Midlands Electricity was last night preparing to mount a full-scale bid defence as news emerged that Dominion Resources, a US utility company, was considering making a possible pounds 1.2bn takeover offer.

The announcement followed a day of mounting speculation, with East Midlands shares soaring 70p to close at 607.5p, adding pounds 200m to the company's stock market value.

Dominion Resources, the parent company of Virginia Electric and Power, said it was evaluating a possible offer and its board would meet soon to consider how to proceed. In a statement the company said: "The present view of the executive management of Dominion Resources is that it will not recommend to its own board making an offer at a price that is much in excess of East Midlands Electricity's closing price today of 608p per share."

A team of Dominion executives flew to London earlier this week and are thought to be seeking an urgent meeting with Nigel Rudd, East Midland's chairman. They have instructed SBC Warburg and US buyout specialists Wasserstein Perella as advisers. Mr Rudd was last night travelling back to Britain from a business trip abroad.

An East Midlands spokesman said: "We note the announcement but until there is a formal offer on the table can't comment."

The US group had been linked with a bid for East Midlands in August, but the move had been put on hold pending scrutiny by regulators concerned about its impact on Dominion's 1.8 million customers in Virginia and South Carolina. It is thought the necessary hurdles have now been cleared.

However a formal offer cannot be launched until the Dominion board meeting. The chairman, Thomas Capps, is in the US and given the time it would take for the group's team to return from the UK, it suggests a bid would be unlikely until Friday at the earliest.

Dominion's current market valuation is $6.6bn (pounds 4bn).