National Power set to raise Southern bid

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The Independent Online
National Power is today expected to renew its bid for Southern Electric with an offer of around pounds 9.90 a share, valuing the company at just under pounds 2.6bn.

The renewed bid is designed to fend off a threatened pounds 8bn takeover of National Power by Southern Company, the giant American utility.

National Power's offer will be conditional on the deal being waved through by Trade and Industry Secretary Ian Lang.

In an attempt to rush the offer through, National Power may dispense with the conventional 60-day bid timetable in favour of a 21-day bid.

Southern Company of Atlanta, Georgia, was meanwhile reviewing its options yesterday as it became clear that National Power was intent on pursuing an independent strategy and rebuffing the American merger approach. Some observers believe the US utility might abandon its planned takeover and switch its attentions elsewhere in the UK or Europe.

One source said: "If National Power is intent on pursuing an expensive short-term defence of itself, Southern will opt for another target, perhaps in another part of the world.

"There is a distinct possibility that Southern will not bid and it is getting more probable with every move National Power makes."

The Government is expected to announce later this week whether it will allow the National Power-Southern Electric merger to proceed.

The takeover has already been approved with only minimal conditions by the Monopolies and Mergers Commission. Ministers may, however, decide to impose tougher conditions on the merger to protect competition and prevent National Power abusing its dominant position in the electricity pool, the wholesale market for England and Wales.

National Power's initial bid last October was worth pounds 10.10 a share and valued Southern Electric at pounds 2.8bn but since then it has demerged its stake in the National Grid. Its fresh bid of around pounds 9.90 compares with last Friday's closing price of pounds 8.59.

National Power is likely to justify the healthy premium on the grounds that its price will include the final dividend Southern Electric is paying. Since last October Southern Electric has also benefited from the pounds 600m sale of First Hydro to Mission Energy of the US.

National Power's manoeuvrings since Southern Company made its merger approach last Tuesday are said to have been viewed as "extremely depressing" in the American camp.

In addition to its renewed bid, National Power announced the pounds 1.7bn sale last Friday of 4,000 megawatts of power station capacity to the Hanson- owned Eastern Electricity.

Some sources suggest this has made the prospect of Southern Company going ahead with a hostile bid remote. Others believe that the Americans are simply trying to dampen expectations and hence lower the price at which they will bid.

Tom Boren, chief executive of Southern Electric International, Southern Company's overseas division, left Britain last Friday for Europe and was flying on to America.

If Southern did pull out, it could turn its attention to a deal with PowerGen, or build its own power stations in Britain.

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