Manweb rejects new pounds 1.1bn offer from Scottish

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Manweb, the besieged regional electricity distributor, last night rejected an improved pounds 1.13bn offer from Scottish Power and said it was astounded that talks over the weekend were abruptly broken off, writes Peter Rodgers.

"We still believe it does not represent full value for shareholders," said Stuart Siddall, Manweb's finance director.

The new offer, which is final, represents an increase of pounds 80m on the previous bid and was widely regarded yesterday in the City as tipping the fight in Scottish Power's favour. It came after Scottish Power's advisers approached Manweb on Saturday to say they planned an increased offer but would like to talk about a recommendation in favour from the Manweb board, which reacted with hostility to the original bid. Mr Siddall said: "Any opportunity for further discussion was cut off by their decision to make a final offer this morning."

However, the two sides on Sunday appeared to have been so far apart on price that Scottish Power decided to stick to its timetable and announce the new offer first thing yesterday.

Scottish Power said Manweb had been warned that an answer was needed by 6.00pm on Sunday evening. With 2.5 per cent of Manweb purchased in the market yesterday, Scottish Power now has 17.5 per cent and acceptances on top of 5 per cent.

The new Scottish Power offer follows Manweb's scorched- earth defence on Friday, when it offered to pay back just over pounds 600m to shareholders in a mixture of cash, shares and tax benefits to persuade them to reject the bid. Even before the new offer, analysts had reacted sceptically, wondering whether it was enough to beat off Scottish Power, particularly since the regulatory hurdles have been cleared by Ian Lang, President of the Board of Trade, and there is now no likelihood of a monopolies reference.

Manweb made clear that it planned to fight to the bitter end for its own package.

Ian Robinson, chief executive of Scottish Power, said: "We think we have put out a realistic offer to win."

The new Scottish Power offer raises the cash alternative 75p to 990p, valuing the company at pounds 1.07bn. It also increased the main cash and share offer by 10p to pounds 10.25, by raising the cash component, a move that had not been widely expected. This values Manweb at pounds 1.13bn.