Hyder in boardroom split over break-up option

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The Independent Online

Hyder, the Welsh water and electricity company, was last night still considering an increased £495m offer from Nomura, the Japanese investment bank, amid signs of a boardroom split at the utility.

Hyder, the Welsh water and electricity company, was last night still considering an increased £495m offer from Nomura, the Japanese investment bank, amid signs of a boardroom split at the utility.

The Hyder board met yesterday to consider the latest bid in the takeover saga, which has become a three-way battle. Hyder was also discussing an unusual alternative break-up proposal, submitted last week but only made public at the weekend, from a newly-formed company called Glas Cymru, led by Lord Burns, the former permanent secretary at the Treasury.

Western Power Distribution, a US joint venture, also has a 300p a share bid on the table.

Insiders said the Hyder board was split, with chief executive Graham Hawker favouring Nomura, but other members backing Glas Cymru. No decision was announced by Hyder.

It is thought that on Friday last week, Nomura told Hyder that it was willing to raise its offer, from the 260p a share bid in April, to 320p a share - conditional on a recommendation.

Hyder said on 18 July that it would re-examine the possibility of breaking up the company - an option looked at before the original Nomura bid. It appointed investment bank Merrill Lynch to work on the proposal. Industry sources said that the eleventh-hour Glas Cymru proposal was the outcome of the Merrill Lynch review.

Lord Burns is heading Glas Cymru, a firm set up specifically for the bid. It styles itself as a nationalistic offer "by Welsh people for Welsh people". The rival US and Japanese takeover plans have aroused strong emotions and fears of job losses in Wales - Hyder is the biggest company there. Aside from Lord Burns, the other members of Glas Cymru have not come forward publicly.

The plan would see Glas Cymru take on the Hyder water business and its £1.7bn of debt. Hyder would then be free to sell the electricity business. Glas Cymru would not be a mutual owned by its customers - an option already rejected by the regulator in the case of another utility Kelda - but would be owned and controlled by 200 "members" who will be "drawn from a wide range of Welsh life". It would not be run for profit and is backed by Barclays Capital, the bank originally supposed to finance the WPD bid but which later withdrew its involvement.

Nomura has been irritated by Hyder reconsidering a break-up, which it sees as unworkable and likely to further delay the bid. Waiting for regulatory clearance for the WPD bid has already prompted several extensions of Nomura's offer, which is now due to close on Wednesday. WPD is still awaiting a decision on whether its bid is to be referred to the Competition Commission.

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