Northern refuses to change articles

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The Independent Online
Northern Electric has refused to call an extraordinary general meeting to change the company's articles of association allowing the £1.2bn hostile takeover bid from Trafalgar House to proceed.

The move, which is normal practice in bid situations in the best interests of shareholders, is needed to change the rule preventing any single shareholder from owning 15 per cent or more of the shares.

Two shareholders are thought to have asked Northern to requisition the meeting. But the company has so far been able to decline because the holding does not amount to 10 per cent. It has decided to take no action for the time being.

Trafalgar House would be prevented anyway from taking over the company until after the end of March, when the Government's special share in each of the 12 regional electricity companies expires.

The company has not ruled out an egm at a later date. A spokesman said: "We will fight this on our record and on the benefits we will provide to shareholders in future."

Northern is preparing for the offer document from Trafalgar, due by 16 January, and is working on a submission to the regulator, Offer, which wants a response by the middle of next week.

It is likely that one of the two shareholders seeking the egm is Swiss Bank, thought to have about 3 per cent of Northern Electric's shares.

Yesterday Jack Cunningham, shadow secretary of state for trade and industry, attacked Michael Heseltine, President of the Board of Trade, for his silence concerning the bid.

Mr Cunningham said there was concern over the suitability of a conglomerate taking over a regional electricity company. He said Northern Electric is seeking a Stock Exchange enquiry into share price movements following speculation over a bid and that he shared that concern.