North West stuns rival with raised bid for Rec

MARY FAGAN

Industrial Correspondent

Norweb, the regional electricity company, succumbed to attack from North West Water after a renewed pounds 1.83bn offer yesterday

The size of the offer surprised the City and was met with a resounding silence from North West's rival bidder, Texas Energy Partners, which is now expected to turn its attention to another electricity target.

The revised offer values each Norweb share at pounds 11.70 with a cash alternative of pounds 11.50, compared with Texas Energy's latest cash offer of pounds 10.85. For Norweb shareholders, who can reclaim tax on the special dividend element of the price, North West's offer is worth up to 1,207.5p per share.

The price per share is regarded as extremely high against Hanson's agreed bid for Eastern Electricity at pounds 9.75, and the pounds 10.10 per share tabled by National Power in its proposed friendly takeover of Southern Electric.

Shares in North West Water, which built its stake in Norweb to 25 per cent yesterday, fell by 22p to 573p. One City analyst said: ''This is very, very overpriced. The shareholders I am talking to are not happy."

There is a view that North West's determination to win Norweb is driven by the desire of the company's chairman, Sir Desmond Pitcher, to build a regional super-utility in the north west of England. But Brian Staples, North West's chief executive, flatly rejected the suggestion that his company has gone too far. He said the takeover would still be earnings enhancing in the first full year and that interest cover and the gearing of the enlarged group would remain "prudent''.

He went on: "I can tell you that North West's board have determined a position which we would never go beyond. The multi-utility created through the merger of North West Water and Norweb, with their substantially overlapping customer bases, will be uniquely placed to deliver efficiency savings, which will bring benefits to both customers and shareholders."

There is concern in the City about the regulatory and political risks facing the enlarged group, which would fall under the scrutiny of Offer and Ofwat, and be subject to two price control regimes. One analyst also stressed the potential problems of integrating the two businesses, and the fact that the water group has no experience in the electricity sector.

Ofwat, the water industry regulator, has already warned that it needs to be convinced that the takeover will not compromise North West's ability to fund its core water and sewage operations. Ofwat and Offer have prepared a joint submission on the proposed bid for the Office of Fair Trading, which will advise the Government on whether the bid should be referred to the Monopolies and Mergers Commission.

The revised offer coincided with a renewed call by the Labour Party for the entire industry to be referred to the MMC in the light of the surge of bids for regional firms.

The board of Norweb said it had ''no reason to expect Texas Energy Partners will revise its current offer ... and intends to recommend shareholders to accept the further increased offer from North West".

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
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

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

SThree: Trainee Recruitment Consultant

competitive: SThree: Are you passionate about sales?Do you have a keen interes...

Recruitment Genius: Loan Adviser - OTE £30,000

£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Day In a Page

Isis in Syria: Influential tribal leaders hold secret talks with Western powers and Gulf states over possibility of mobilising against militants

Tribal gathering

Influential clans in Syria have held secret talks with Western powers and Gulf states over the possibility of mobilising against Isis. But they are determined not to be pitted against each other
Gaza, a year on from Operation Protective Edge: A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians

Gaza, a year on from Operation Protective Edge

A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians
Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously

Illnesses, car crashes and suicides

Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously
10 best trays

Get carried away with 10 best trays

Serve with ceremony on a tray chic carrier
Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Wimbledon 2015: Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Serena dispatched her elder sister 6-4, 6-3 in eight minutes more than an hour
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?