Nomura contests WPD's Hyder bid victory

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Nomura was last night contesting the outcome of the four-month takeover battle for Hyder, the Welsh utility, after apparently coming out on the losing side in an unprecedented finale involving the submission of sealed bids.

Nomura was last night contesting the outcome of the four-month takeover battle for Hyder, the Welsh utility, after apparently coming out on the losing side in an unprecedented finale involving the submission of sealed bids.

It is understood that rival Western Power Distribution, a US energy joint venture, offered more money under a procedure invoked by the Takeover Panel. Both sides had until 1pm yesterday to submit their final offers.

WPD appeared to have emerged the victor, with a bid of 365p a share, valuing Hyder at £565m. It was just 5p a share more than Nomura's last offer, made on Wednesday, of 360p a share.

However, the result was delayed because of frantic last-minute appeals from Nomura, the Japanese bank. Nomura, had already declared the sealed bids procedure "wholly inappropriate" on Thursday.

Under the sealed bids rules, the two sides were each required to submit offers which involved making a specific bid and also stating a maximum threshold the party was willing to pay. Under the Takeover Panel specification, the winner would be the side with the highest maximum, but the price it would actually pay would be the threshold submitted by the losing side plus 5p.

Nomura yesterday simply repeated its 360p-a-share bid and offered no higher maximum, so WPD appeared to clinch it at 360p plus 5p. It is understood that WPD offered 360p, with a threshold of 375p or 380p.

The market overestimated the price Hyder would go for, with its share price closing yesterday 4p up at 385p, well ahead of the winning bid. Some investors were still buying at these levels in the expectation of a substantially higher final offer emerging.

Although the Panel has proposed using sealed bids to settle a contested takeover twice before - in the takeover battles for Energy Group two years ago and Eagle Star in the early 1980s - it was not used in either case as one side dropped out before the close.

The contest for electricity and water group Hyder is the only takeover battle that has seen two cash bidders left in the race on the last day allowed under takeover rules, which fell yesterday.

The sealed bids mechanism was meant to provide an orderly outcome to the takeover, with the result due at 4pm yesterday. However, with no winner declared by 6.30pm, and the Hyder share price closing well above the winning bid, analysts said the procedure was in danger of being seen as farcical.

Even at 360p or 365p, analysts have been surprised by the price the two bidders were prepared to pay for Hyder which is weighed down by £1.9bn of debt. The Hyder board, led by chief executive Graham Hawker, recommended Nomura's original offer, made in April, at 260p.

Nigel Hawkins, an analyst at Williams de Broe, said: "We will see in the fullness of time whether WPD has overpaid. Americans have come over and overpaid for UK utilities before."

Hyder, floated at 240p in 1989, saw its share price hit a high of 1,048.5p in 1998, then fall away sharply. Before takeover speculation emerged in March this year, the shares were trading under 190p.

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