London Electricity up for sale with pounds 1.9bn price tag

A FRESH wave of consolidation was in prospect in the energy sector after London Electricity was put up for sale yesterday by its US owners, Entergy.

The sale is expected to raise up to pounds 1.9bn, compared with the pounds 1.5bn New Orleans-based Entergy paid for London Electricity 18 months ago.

Bidders may include owners of other regional electricity companies (Recs), rivals such as Centrica and financial buyers such as the Japanese bank, Nomura. PacifiCorp, which lost the battle for Eastern, is another likely bidder.

Mike Bemis, the chief executive of London Electricity, indicated that the company had already received about 20 expressions of interest and more were likely to surface.

A memorandum of sale is due to be issued towards the end of this month by Entergy's financial advisers, Morgan Stanley Dean Witter, with the aim of completing the sale by early next year.

Entergy is also selling its Australian electricity business CitiPower and some US telecoms and energy management businesses. The group is aiming to raise $4bn (pounds 2.5bn), the bulk of which will be used to reduce debts standing at $10bn.

London Electricity has been seeking a merger with another Rec for some time and held talks with Seeboard and Northern Electric.

The decision to sell the business altogether follows a change of management at Entergy in May, which saw the abrupt departure of its chairman and chief executive, Ed Lupberger, who negotiated the original purchase in 1996.

Entergy said it would now concentrate on its US electricity business, nuclear power and international power generation. It said the sale of London Electricity would not affect its investments in UK power generation, adding that Entergy could be interested in bidding for power stations being sold off by PowerGen and National Power.

The decision to sell London Electricity follows the pounds 1.9bn sale last month of East Midlands Electricity to PowerGen by another US utility, Dominion Resources. PowerGen has completed the purchase and is waiting to see whether it will escape referral to the Monopolies and Mergers Commission.

London Electricity is one of seven UK Recs taken over by US utilities since mid-1995. The others are Yorkshire, Midlands Electricity, Northern, Seeboard and Eastern.

A sale to one of these companies is possible, but Mr Bemis said there were also a number of other leading US utilities without a UK presence that could be interested.

The candidate most likely to launch a financially-structured bid is Nomura's principal finance group, run by Guy Hands. Nomura considered making a bid for Eastern, part of the Energy Group, but pulled out claiming the price was too high. The company was eventually bought by Texas Utilities for pounds 4.45bn earlier this year.

London Electricity has 2 million customers and 4,000 employees. Before its sale to Entergy a number of US utilities were deterred from bidding by the fact that it supplies the capital, leaving its owner vulnerable to adverse publicity in the event of power failures.

In the second quarter London Electricity contributed $65m to Entergy's improved financial performance, although $44m related to tax benefits.

Outlook, page 15

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
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

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum