Hanson bids for Eastern

MARY FAGAN AND

TOM STEVENSON

Hanson made its long-awaited swoop on the electricity sector yesterday with an agreed pounds 2.5bn takeover bid for Eastern Electricity, the largest of the 12 regional companies.

The offer, the largest since Glaxo's successful pounds 9bn attack on its drugs rival Wellcome, prompted calls from the Labour Party and consumer groups for the takeover to be referred to the Monopolies and Mergers Commission.

The bid is the third within three weeks in the sector and at pounds 9.75 a share was seen as a new benchmark for bids in the industry.

Dealers speculated that it might force Scottish Power to lift its pounds 9.15- a-share offer for Manweb. Attention also focused on the pounds 9-a-share bid from Southern Electric International of the US for South Western Electricity.

Eastern's shares jumped 209p to 909p, but closed well short of the cash offer price as investors worried about the possibility of a referral of the bid to the Monopolies and Mergers Commission. Shares in Manweb fell for the same reason by 15p to 875p, but the market's uncertainty was underlined by Sweb shares, up 40p to 905p.

Hanson's shares closed 1.5p lower at 218.75p as analysts questioned the high price it appeared to be paying for Eastern. Derek Bonham, deputy chairman and chief executive of Hanson, defended the offer price, for what he called the "flagship" of the sector.

"We are fully committed to the future of energy, and Eastern fits extremely well into our declared strategy to make a large acquisition in a new field offering significant growth opportunities," he said.

The market has been expecting a bid from Hanson since the company demerged 34 of its smaller US companies in May, reducing group debts by pounds 855m. The move was widely viewed as a clearing of the decks before a large acquisition.

A regional electricity company had been tipped as a bid target because Hanson's large overseas profits had left it with an onerous advanced corporation tax liability, which could only be solved by the acquisition of a steady stream of UK earnings. Hanson had previously shown interest in the sector in 1990 when it took a stake in PowerGen, the electricity generator.

The pounds 2.5bn price tag, which will leave Hanson with gearing of 130 per cent, includes about pounds 500m for Eastern's 12.5 per cent stake in the National Grid Company, due to be sold off later this year. Mr Bonham would give no details of Hanson's plans for the stake.

John Devaney, chief executive of Eastern, said: "It is important to stress that it will be business as usual for Eastern people and for Eastern's customers, who naturally come first. The Hanson group recognises that electricity is something where you have to pay lots of attention to customers."

Mr Devaney, who becomes chairman of the electricity operation once the deal goes through, also said there would be no fresh jobs cuts as a result of the acquisition.

The takeover is conditional on the bid not being referred by the Government to the Monopolies and Mergers Commission and on "indications" from Professor Stephen Littlechild, the electricity watchdog, that he will not impose unwanted licence changes on Eastern or "seek undertakings" from the company.

Professor Littlechild called for an earlier bid for Northern Electric by Trafalgar House to be referred to the MMC but was subsequently overruled by Michael Heseltine, then President of the Board of Trade.

Professor Littlechild said last night that he had yet to form a view on Hanson's planned takeover of Eastern, but added: "I cannot commit myself to anything - that would be inappropriate."

Comment, page 15

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
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

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk