Lang gives Northern bid green light

Ian Lang, President of the Board of Trade, yesterday gave a green light to a final wave of takeover bids for the few remaining independent regional electricity companies, by deciding not to refer to the Monopolies and Mergers Commission the pounds 782m hostile bid by US-owned CE Electric for Northern Electric.

The decision wrong-footed several City analysts who had predicted an MMC investigation and sent shares in all five remaining independent RECs soaring. Northern's share price jumped by almost 7 per cent, from 602.5p to 642p, just short of CE Electric's raised 650p all-cash offer.

Shares in the three remaining independent RECs which are not subject to takeover bids also surged ahead, with London Electricity rising 28p to 679.5p, Southern Electric adding 27p to 774.5p and Yorkshire Electricity jumping by 13.5p to 756p.

The decision also makes government approval of the agreed pounds 1.3bn takeover bid by US utility Dominion Resources for East Midlands Electricity almost certain. Sources said it would be inconceivable that Mr Lang would refer the Dominion bid to the MMC after having given the go-ahead for the bid for Northern. East Midland's shares were up 30p to 656.5p, compared with Dominion's cash offer of 670p.

Some leading City investors had also expected an MMC referral on the basis of recent surprise decisions by Mr Lang, including his ruling blocking bids for South West Water by rival water companies.

There was speculation last night that other US utilities would make bids for RECs early in the new year, with the industry facing a complete carve- up before the general election. One analyst suggested Entergy, the New Orleans utility, could renew exploratory discussions with London Electricity.

Yorkshire Electricity last night denied it had received any bid approaches. A spokesman said: "We are not in any talks with anybody. We've been asked the same question for the past 18 months and there's always been the same answer."

Mr Lang's announcement said the DTI had been given specific assurances by CE Electric that it would maintain Northern's "financial and management resources", reflecting concerns expressed by Professor Stephen Littlechild, the industry regulator. CalEnergy, the US power generator which is CE Electric's biggest shareholders, has debts of around $2bn (pounds 1.2bn) and has been frequently quizzed about its debt rating.

Northern's chances of fending off the bid were helped yesterday as another leading City investor came out in support of the company's existing management, led by chairman David Morris. Foreign & Colonial which holds 1.5 per cent of Northern shares, gave the board its backing. David Manning, and F&C director, explained: "We believe that the current bid for Northern falls well short of a fair value for the company. Northern has delivered on all its promises to date and we feel we should support them in rejecting the final offer."

The Prudential, Northern's biggest shareholder, also pledged to continue supporting the existing management, having raised its stake in the company slightly this week to 11.35 per cent. A spokesman explained: "Our decision was based on our perception of value in the company and this was clearly unaffected by the announcement."

Northern also claimed that another big, but unnamed investor with more than 2 per cent of the company was throwing its weight behind management.

David Sokol, chief executive of CalEnergy, is thought to be meeting the Prudential on Monday in a final lobbying campaign before the Friday 20 December deadline. Mr Sokol insisted his offer remained fair, despite the rise in Northern's share price: "If our offer fails then Northern's shares will head back to the 494p price before we launched the bid."

One obstacle could be Northern's vocal band of small shareholders which controls a total of some 21 per cent of the company.

Chris Foote Wood from the Northern Small Shareholders Association said he would fight to the bitter end to keep Northern independent.

Start your day with The Independent, sign up for daily news emails
Life and Style
love + sex A new study has revealed the average size - but does that leave men outside the 'normal' range being thought of as 'abnormal'?
Arts and Entertainment
The Palace of Westminster is falling down, according to John Bercow
voices..says Matthew Norman
Steve Bruce and Gus Poyet clash
Graham Norton said Irish broadcaster RTE’s decision to settle was ‘moronic’
Arts and Entertainment
Jake and Dinos Chapman were motivated by revenge to make 'Bring me the Head of Franco Toselli! '
arts + ents Shapero Modern Gallery to show explicit Chapman Brothers film
Arts and Entertainment
Kurt Cobain performing for 'MTV Unplugged' in New York, shortly before his death
music Brett Morgen's 'Cobain: Montage of Heck' debunks many of the myths
ebooksA special investigation by Andy McSmith
Life and Style
Brendan Rodgers
football The Liverpool manager will be the first option after Pep Guardiola
Amazon misled consumers about subscription fees, the ASA has ruled
Arts and Entertainment
Myanna Buring, Julian Rhind-Tutt and Russell Tovey in 'Banished'
TV Jimmy McGovern tackles 18th-century crime and punishment
Arts and Entertainment
Paul Whitehouse as Herbert
arts + ents
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Austen Lloyd: Law Costs HOD - Southampton

£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...

SThree: Recruitment Resourcer

£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn