Lang's hold on golden shares stuns generators

Ian Lang, the Trade and Industry Secretary, last night sprang another huge surprise on the City and the electricity industry by blocking any takeover bids for the two generating companies, National Power and PowerGen.

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.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
techPatent specifies 'anthropomorphic device' to control media devices
Voices
The PM proposed 'commonsense restrictions' on migrant benefits
voicesAndrew Grice: Prime Minister can talk 'one nation Conservatism' but putting it into action will be tougher
News
Ireland will not find out whether gay couples have won the right to marry until Saturday afternoon
news
News
Kim Jong-un's brother Kim Jong-chol
news
News
Manchester city skyline as seen from Oldham above the streets of terraced houses in North West England on 7 April 2015.
news
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

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?