US utility set to top Nomura's Hyder deal

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The Independent Online

Nomura, the Japanese bank that has secured an agreed bid for Hyder, the Welsh multi-utility, received a blow yesterday when an American rival promised to top its £402m offer.

Western Power & Distribution revealed that it had approached Hyder regarding a possible £464m bid. It said it aimed to secure a recommendation from Hyder's board at a premium to Nomura's offer of 260p per share.

Western Power sources indicated it is likely to offer 285 to 300p a share. It is conducting due diligence and expects to make a firm offer within days.

The US company is only interested in Hyder's electricity assets. It already runs an electricity distribution business in the south-west of England.

Under its plan, it would sell Hyder's water business to a management team, which has the financial backing of Barclays Capital. The new water company would be run on a not-for-profit basis, with the operation of the water assets awarded to United Utilities.

The company owning the water assets would be run by a small team, which would deal with the regulator and monitor United's performance. It is thought that, after providing bridging finance to the new water company to be formed from the Western offer, Barclays will securitise the revenue stream.

The source said Western believed it would deliver a "knock-out" blow to Nomura, which would be unable to extract the same value as it is not splitting up the two businesses. "Nomura were being opportunistic. They believed no-one else would come in and they pitched their bid too low."

Nomura, acting through the principal finance team led by Guy Hands, posted its offer to shareholders last week.

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