With the £1.2bn bid in the balance after Professor Stephen Littlechild's unexpected U-turn on price controls for the regional electricity companies, leading investors are being told that this might be the only way of persuading Trafalgar House to keep the offer alive.
The Takeover Panel has told Trafalgar House that there is no question of it being allowed to reduce its offer across the board, despite the collapse in regional electricity share prices that followed the regulator's announcement.
However, under the rules, Trafalgar House would be allowed to buy up to 30 per cent of the stock through the stock market. Advisers believe most institutions would be prepared to part with some of their holdings at £9 a share provided they could sell the rest at £11.
The effect would be to reduce Trafalgar House's average price per share to around the £10.40 mark.
Northern Electric is being widely blamed among other regional electricity companies for prompting regulatory action with a defence against Trafalgar's bid which others regarded as way over the top.
Northern was offering £500m to shareholders in sweeteners in an attempt to persuade them to reject the bid. Prof Littlechild cites this as one of the reasons why he decided the price controls announced just eight months ago were not sufficiently demanding.
The value of directors' share options, worth millions of pounds in some cases, have been badly hit by the regulator's volte face.