North West stuns rival with raised bid for Rec
Thursday 12 October 1995
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".
- 4 Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
- 5 Free U2 album: How the most generous giveaway in music history turned into a PR disaster
Stamford Hill council removes 'unacceptable' posters telling women which side of the road to walk down
Kim Kardashian 'nude pictures' leaked on 4chan weeks after Jennifer Lawrence 'The Fappening' scandal
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Jennifer Lawrence 'naked sex video' will be leaked next, threatens 4Chan celebrity photo hacker
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Archbishop of Canterbury admits doubts about existence of God
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...