The potential US power bidder was thought to be CMS Energy, which supplies electricity and gas to 1.5 million customers in Michigan. It had sales last year of $3.9bn (pounds 2.4bn) and made profits of $603m (pounds 365m). CMS Energy has been increasingly active in power projects outside the US and makes 20 per cent of its revenues abroad.
Kelly Farr, a CMS spokesman, declined to comment. "It is company policy not to comment on rumours about our business activities," he said.
One suggestion was that CMS could pounce on Yorkshire Electricity, though the company is not believed to have had approaches from any potential suitors for five or six months.
The possibility was also raised that a rival bidder could be in the wings for East Midlands, which is facing a possible bid from Dominion Resources, a Virginian utility company.
Dominion has said that it would not be prepared to pay much more than 608p a share for East Midlands, valuing the Nottingham-based group at pounds 1.2bn, though analysts have suggested a successful bidder would have to pay around 670p. Shares in the company edged up 1p to 593.5p.
The outcome of the Dominion board meeting is not expected to be known until the stock market reopens on Monday.
However fund managers doubted whether the UK Government would allow a pounds 766m takeover bid for Northern Electric from US-owned CE Electric and any bid for East Midlands to proceed.
The uncertainty took its toll on Northern Electric's share price yesterday. Northern shares slumped 18p to 605.5p, which is 24.5p below CE Electric's 630p offer price.
It enabled CE Electric to buy a further 2.7 million shares in the company and takes CE Electric's stake to 29.45 per cent, just short of the maximum stake of almost 30 per cent permitted at this stage in the bidding process under takeover rules.
Big sellers of Northern shares over the past two days included Mercury Asset Management, which sold 1.19 million shares, representing almost its entire stake in the group, and Hill Samuel, which sold 564,000 shares.
David Sokol, the chairman of CE Electric's main shareholder, power generator CalEnergy of Nebraska, called on Northern's management to recommend the offer to shareholders.
"To prolong this takeover can only be damaging to shareholders' interests. Our intent towards Northern Electric has always been friendly and I hope that the Northern Electric board will recognise these market realities and discuss with us the recommendation of our offers," he said.
Mr Sokol's comments weredismissed by Northern's advisers, who insisted the battle was far from over.
A disappointed David Morris, the Northern chairman, said he still believed the 630p- a-share bid was too low and blamed the share price fall on the belief that the bid would be referred to the Monopolies and Mergers Commission.
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