London Electricity up for sale with pounds 1.9bn price tag
Tuesday 04 August 1998
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
- 1 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 2 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 3 Google April Fools': company unveils backwards search engine and huggable digital assistant
- 4 April Fools' Day 2015: The best hoax news stories from around the internet
- 5 Gamers confess the worst things they've done in The Sims
University of Cambridge: Remains of 1,300 scholars are found under building
April Fools' Day 2015: The best hoax news stories from around the internet
April Fools' Day 2015 live: The best pranks and fake stories from around the world
Turkey power cut: Prime Minister says nationwide blackout could be caused by terrorists
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...
£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...