A move by Hanson for a regional electricity company had long been expected, though Southern and Yorkshire were tipped as the most likely targets.
Speculation was growing over the weekend that Hanson's advisers NM Rothschild and Hoare Govett were working on an agreed deal to avoid running into complications with the electricity regulator, Professor Stephen Littlechild.
Hanson refused to comment yesterday, but executives have in the past hinted that they were preparing for a large takeover. A deal for Eastern would be Hanson's first large bid since it bought Quantum, the United States chemical group, in 1993.
Earlier this year, Hanson hived off 34 of its non-core American businesses into US Industries. The move, which netted Hanson about pounds 850m, was widely seen as a deck-clearing exercise in readiness for another takeover move.
Eastern, valued at pounds 1.75bn, stands behind Southern Electricity, valued at pounds 1.89bn, as the largest company in the sector. Eastern could not be contacted last night, and a Southern spokesman declined to discuss suggestions it had also been approached by Hanson.
Southern has said in the past that it is interested in talking to potential partners, though this was thought to mean other electricity companies rather than conglomerates such as Hanson or Tomkins.
Eastern is seen as one of the better-run utilities, and profits of pounds 203.5m last year are expected to rise sharply this year.
John Devaney, Eastern's chief executive, is a highly regarded and ambitious businessman and could be given a place on the Hanson board as part of any takeover.
The electricity sector's enormous profitability makes further takeovers highly likely, though Trafalgar House, the UK industrial group, is said to be having second thoughts about reviving its offer for Northern Electric. "Whether Trafalgar will bid is too close to call,'' said one observer.
Manweb's annual meeting tomorrow is expected to be dominated by the hostile bid from Scottish Power. And Southern Western Electricity is in the throes of a contested pounds 1bn bid from the US group Southern Company.
The US utilities Pacific Gas & Electric and Houston Light & Power are rumoured to be potential white knights for Sweb.Reuse content