Lang's hold on golden shares stuns generators
Mr Lang said that in the light of the possibility of bids being made for the generators he had decided to retain the golden shares in the two companies. These limit individual investors to a maximum holding of 15 per cent and last indefinitely.
The move appears to wipe out the prospect of an pounds 8bn-plus bid for National Power from Southern Company of the US and sent shares in the two generators plunging. National Power shares fell 32p to 527p while PowerGen ended the day 12p lower at 536p.
Last night analysts and industry observers were at a loss to understand Mr Lang's reasoning although one source said it made his decision to bar takeovers by the two generators of regional electricity companies look still more politically motivated.
Mr Lang said it was important that National Power and PowerGen remained independent generating companies operating in a market that was not yet fully competitive.
However, he added that the Government would be prepared to consider whether to redeem the special shares as and when it was satisfied that there was "adequate competition in generation and supply markets".
The statement merely added to the widespread confusion over the Government's policy towards the industry as it appeared to suggest that, for the time being, bids would be blocked irrespective of whether the bidders had existing interests in the power industry.
Mr Lang is due to set out the Government's policy towards the utilities sector in a keynote speech to an Adam Smith conference in London next week.
The veto on bids for the two generators follows a warning from the electricity regulator, Profesor Stephen Littlechild, on Tuesday that he would oppose a Southern Company takeover of National Power on the grounds that the US company already owned a Rec - South Western Electricity.
National Power, which had been on bid alert for a move by Southern, said last night that it would be demanding an immediate statement of clarification from the company.
It also indicated that it would go ahead with a new dividend policy and changes to its capital structure despite the receding prospects of a hostile offer.
This, it said, would take into account the blocking of its own bid last week for Southern Electric of the UK, its plans for international expansion and the effect on its balance sheet of the pounds 1.7bn sale of generating plant to the Hanson-owned Eastern Group. PowerGen refused to comment.
Comment, page 21
The National Grid finally made contact with the Saudi investment group Olayan yesterday in its effort to discover the future of the 12.5 per cent of its shares Hanson sold to James Capel on Tuesday for pounds 405m. David Jones, chief executive, and John Uttley, finance director, met with Olayan executives in London to ascertain the significance of a hedging agreement between the Saudis and James Capel, the HSBC-owned broker which admitted on Wednesday that it was the beneficial owner of the shares. In a statement, the Grid said: "It was a constructive and satisfactory meeting." A further statement is expected today.
That's some guestlist! Stunning images show huge dynastic wedding between Ultra-Orthodox Jewish families which attracted 25,000 guests
'Sickening, deluded and unforgivable': Bloody attack brings terror to capital’s streets
Anonymity order lifted for triple child killer David McGreavy jailed in 1973
World news in pictures
Far-right French historian, 78-year-old Dominique Venner, commits suicide in Notre Dame in protest against gay marriage
- 1 'Sickening, deluded and unforgivable': Bloody attack brings terror to capital’s streets
- 2 Mothers' diets may harm IQs in two-thirds of babies
- 3 Gay couple beaten in park urge MPs to moderate language on gay marriage
- 4 After woman sells virginity for $780,000, here are the results of our prostitution survey
- 5 Far-right French historian, 78-year-old Dominique Venner, commits suicide in Notre Dame in protest against gay marriage
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.