National Power takeover fever grips market

Takeover fever gripped the electricity sector last night amid speculation that National Power, the largest generator, is being targeted for a pounds 7bn-plus bid. Ordinary shares in the company soared by 27p to 517p and the partly paid by 30p to 387p, boosting the company's market worth by pounds 466m to pounds 7.3bn.

City analysts speculated that US utilities, including Southern Company, could be potential predators. A bid for National Power would require the approval of the Government, which retains a golden share in the company. Agreement by ministers to a takeover, particularly by a foreign group, would almost certainly cause a political furore. It is just over a year since the Government sold its last stakes in National Power and PowerGen for pounds 4bn.

A team from SBC Warburg, the merchant bank which last year advised Southern on its pounds 1.1bn bid for Sweb, was last night locked in meetings and unable to comment. Some City analysts said that National Power, headed by John Baker, would be too big a target for Southern on its own but there was also speculation over a potential joint takeover. Some analysts think Southern Electric would be willing to dispose of some of National Power's generators over and above that planned by the company itself.

Within the industry the speculative talk yesterday focused on the arrangement of a rumoured $12bn (pounds 8bn) loan facility by banks including Barclays de Zoete Wedd and SBC Warburg.

Other names mentioned amid the bid fever included Houston Industries, Pacific Gas and Electric and Mission Energy of the US. One analyst said potential European predators could include Spain's Endesa and Electricite de France. "We are seeing the sort of smoke that we rarely see in this industry without fire. The reason National Power's name has not been in the frame before is simply its size," he added.

The bid flames were fanned earlier in the day following reports that Southern Company of the US was close to selling a large stake in South Western Electricity with a view to making further investments.

Bill Dahlberg, Southern's chairman, said it had no intention of losing control at Sweb, which it bought for pounds 1.1bn last year. But he said it would be "advantageous" to sell a minority interest "to regain some of our financial investment and then reinvest that on other quality companies like Sweb".

Mr Dahlberg did not comment on the generation business, although Southern is thought to have been keen at one time to buy power plants being sold by National Power under pressure from the regulator, Professor Stephen Littlechild. Mr Dahlberg added that he did not envisage buying another UK regional electricity firm "at this point".

National Power declined to comment on the rumours. A spokesman for Southern Company refused to respond to speculation that it might bid for a British company following disposal of the Sweb stake. There was talk in the City earlier that Southern may seek to acquire South West Water, which faces potential rival bids by Severn Trent Water and Wessex Water.

Mr Dahlberg had said he saw "an opportunity coming in pretty quickly to bring in water business in a country outside the US".

The rumours emerged at a sensitive time for National Power, which is awaiting the Government's response to a Monopolies and Mergers Commission report on its proposed takeover of Southern Electric of the UK. Ministers were outraged at the end of last week following the leak of the MMC report on the National Power takeover. The Economist magazine reported that the MMC had recommended that the Government approve National Power's takeover of Southern and that of Midlands Electricity by PowerGen.

Separately, Utilicorp of the US said it would buy out the remaining 25 per cent of its UK subsidiary, which has gas marketing joint ventures with several regional electricity firms. The stake, thought to be worth about pounds 15m, was owned by a company called Norland Gas whose directors included Sir Ian MacGregor.

Comment, page 21

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
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