National Power to bid pounds 2.8bn in cash for Southern Electric

The carve-up of the electricity industry will gather momentum today when National Power launches an agreed pounds 2.8bn cash bid for Southern Electric and puts three of its own power stations up for sale. Later in the week, Houston Industries, a Texan utilities group, will rejoin the battle for control of Norweb.

National Power's bid is expected to value Southern, the largest regional electricity company, at around pounds 1,005-pounds 1,015 a share, compared to Friday's closing price of 897p.

Two groups are in contention for National Power's planned pounds 1bn power station sell-off: Eastern Group and AES, the US energy group. Eastern said yesterday it had "no comment to make on the speculation".

In another twist, Houston Industries and its partner Central and South West Corporation are planning another bid for Norweb, after their original agreed offer of pounds 1.7bn last week was trumped by North West Water's hostile bid of pounds 1.72bn.

The Texans fear that NWW may be able to increase its 11.7 per cent stake in Norweb if its share price continues to fall.

The two American companies have a combined market capitalisation of $10.4bn and have formed a joint venture, Texas Energy Partners, to invest in utilities world-wide. The Texans have said they want to expand into Britain, partly because of the "very attractive" economic environment, while NWW claims its can get big cost savings by rationalising overlaps betweens its operations and Norweb.

Some power bosses fear that the National Power bid will finally persuade the Government to launch a monopolies inquiry into the industry. The Labour Party conference this week is set to hear strident calls for a full-blown inquiry into the takeover frenzy gripping the privatised utilities.The sale of three of National Power's largest power stations, as ordered by power regulator Professor Stephen Littlechild, is designed to head off this threat.

Eastern, the Rec bought recently by Hanson, is already buying two power stations for pounds 400m from PowerGen. AES lost out to Eastern in that battle. Both companies have been asked to submit bids for National Power's stations in the next fortnight. The parties hope to complete the deal by the end of the year.

This will cut National Power's share of the generating market from 34 per cent to 25 per cent, leaving the number one spot to British Energy, the nuclear group to be sold off next year.

The current tumult in the electricity industry looks set to continue as sources close to the Government indicated that Chancellor Kenneth Clarke is unlikely to copy Labour's idea of a pounds 3bn "windfall tax" on the utility companies.

The prospect of more UK utilities falling into overseas hands is another sensitive political issue. If the Texans are successful, Norweb will become the second British electricity company to be bought by Americans, following the pounds 1.07bn acquisition of South West Electricity by Southern Electric International. There are continuing rumours in the City that PacifiCorp of the US will counter Scottish Power's Manweb bid.

Six of the Recs privatised in 1990 have been bid for so far, while Manweb has been the only one to face a hostile bid. Other American utilities are expected to enter the ring. The two Texas companies had been talking to Norweb for some time about the UK company joining them in a US power generation project, but the discussions were put on hold after the bid discussions began.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

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

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions