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
Life and Style
tech
Arts and Entertainment
Rocky road: Dwayne Johnson and Carla Gugino play an estranged husband and wife in 'San Andreas'
filmReview: In the face of all-round devastation, even Dwayne 'The Rock' Johnson appears a little puny
Arts and Entertainment
Bright lights, big city: Melrose Avenue in Los Angeles by dusk
books
News
i100
Sport
Harry Kane makes Paul Scholes' Premier League team of the season
footballPaul Scholes on the best players, managers and goals of the season - and the biggest disappointments
News
i100
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club that later became synonymous with Hillsborough has dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor