Nomura may force up price for Hyder stake

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Nomura could be planning a "greenmail" assault on Western Power Distribution, after losing out to the US utility in the acrimonious battle for control of Hyder, the Welsh utility.

Nomura could be planning a "greenmail" assault on Western Power Distribution, after losing out to the US utility in the acrimonious battle for control of Hyder, the Welsh utility.

The Japanese bank has a 16 per cent stake in Hyder, acquired at 260p a share. Even though WPD was confirmed last week as the winner of the four-month bid contest for Hyder, at 365p a share, it cannot compulsorily buy out minority shareholders until gets acceptances representing 90 per cent of Hyder shares. This would require Nomura tendering its stake, which would give the Japanese bank a £30m profit anyway.

There were also suggestions yesterday that Nomura will buy in the market to push its stake to 29.9 per cent, thereby stopping WPD from closing its offer for Hyder.

WPD needs to gain control over Hyder, as it plans to radically restructure the troubled utility, splitting up its water and electricity businesses. Minority shareholders could make themselves very awkward. One industry source said that Nomura could be planning to retain its stake until WPD offers it significantly more than 365p a share.

The possible tactics from Nomura echo the highly aggressive use of minority stakes by US corporate raiders such as Carl Icahn, the former owner of TWA, the US airline. He became famous in the 1980s for using minority shareholding to force companies to buy him out at a premium to the market price, a strategy known as "greenmail".

A spokesman for Nomura said yesterday: "We have not yet decided to accept the [WPD] offer. Given the size of our stake, we would probably have to make an announcement when a decision is reached."

Nomura continued to appeal to the Takeover Panel after it lost a final round of sealed bids for Hyder on 11 August. Although no one can accuse Nomura of bowing out gracefully, the bank had been expected to walk away after the Takeover Panel decisively threw out its protests last week.

Nomura had claimed that WPD could not have won the sealed bids round, even though WPD was the only party to submit a sealed bid, because it did not announce its winning offer by the stipulated deadline. An appeal before the full Panel last week awarded Hyder to WPD.

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