Not much to fight over in the latest power struggle

City & Business

HOSTILE takeover bids are a delight, especially in the dog days of summer, when financial journalists are scraping around for things to write about. If Roche of Switzerland really does take a pounds 14bn tilt at Zeneca this week, as some in the stock market are convinced it will, there will be cheers - from Fleet Street at least.

But the billion-pound scrap between the American group Southern Electric and our very own South Western Electricity is in danger of giving hostile bids a bad name.

What is actually in dispute? Precious little. Sweb has all but raised the white flag on its continued independence. The only argument is over price. Even here, absurdly little divides the two sides. Southern's pounds 9 a share bid is ex-div - equivalent to a grossed up pounds 9.25 before the dividend. And Sweb is letting it be known it would accept pounds 10; in other words it would snatch at pounds 9.50. So just 25p a share - less than 3 per cent of the offer price - divides the two sides. Yet they are now preparing for full- scale hostilities, with all the accompanying costs - from advisory fees to to diverted management time.

Each side blames the other for the breakdown of talks last week. The cynic would wonder just how hard the two sets of advisers tried to avert a battle. They stand to gain far bigger fees than if a price could have been agreed.

There has to be a case for putting Southern's president Thomas Boren with Sweb's chairman Maurice Warren in a locked room, switching off the air-conditioning, and not letting them out till they settle on a figure.

No such luck. The battle will take its course. It is early days. We haven't even seen Southern's offer document, let alone Sweb's defence. Doubtless Sweb will come up with some goodies, possibly even a special dividend package. Southern will try to justify its modest offer by reminding investors that a Labour government could slap a windfall tax on utilities.

One factor will favour Sweb. This bid - the first since Professor Littlechild's latest review - will become the benchmark against which other electricity takeovers are measured. So institutional shareholders will be especially anxious to get a good price. That will probably be enough to force Southern to up its offer. But not by more than a notch or two.

Kingfisher blue

IT'S NOW six months since Sir Geoff Mulcahy was demoted from executive chairman to chief executive at Kingfisher, the troubled retail group. In a boardroom bust-up that saw the departures of four other key executive directors, Sir Geoff alone survived to fight another day. His chum Sir Nigel Mobbs stepped in as temporary chairman, pledging to hold the fort until he found a permanent replacment.

Things now seem to have subtly changed. There is growing speculation that Sir Nigel has given up the search and plans to stay on permanently as chairman himself. Why else has it taken so long to fill such a plum job?

If this is the case, Sir Nigel should think again. Some institutional shareholders would not wear it. He is too close to Sir Geoff. His own record at Slough Estates is patchy. And he combines the role there of chairman and chief executive, which is Cadburially incorrect and also raises the question of whether he really has the time to chair Kingfisher too.

Kingfisher is not out of the woods yet. Its shares last week hit a new low relative to the stock market. It still needs a credible outside chairman untainted by past associations with the group and not too close to Sir Geoff. Sir Nigel is not that man. He should unleash the headhunters again.

Dilemma for Fraud Office

NICK LEESON'S offer to plead guilty to criminal charges if he is extradited to Britain is understandable. A possible spell at Ford Open Prison looks a lot more attractive than a helping of Singaporean porridge.

The Serious Fraud Office has until now resisted all blandishments to take a serious interest in the case. But the latest proposal puts it on the spot. The proffering of Leeson's head on a plate, as his solicitor puts it, must be tempting. The SFO has allowed rather too much big game to get away in the past.

However, if, for any reason, the SFO still failed to secure a conviction or only got a mild sentence, the embarrassment would be colossal. It is acutely sensitive to public opinion, especially after the recent public humiliation of its director, George Staple, by the Treasury Select Committee.

Leeson has done little to endear himself to the British authorities. He refused to co-operate with the Bank of England investigation into the Barings collapse. But anyone facing the dubious delights of Singapore's legal system at least deserves a hearing. The SFO should drop its pride and send an investigator to Leeson's cell.

Mortgage madness

NORTHERN ROCK's shabby move to impose extra penalties on its borrowers is the latest example of the madness infecting the mortgage market.

Mortgage providers, in their desperation to win new business, are offering more and more enticing terms to attract new borrowers. Meanwhile, they are making life less and less comfortable for their existing borrowers.

After one or two years of wonderfully low interest rates, borrowers suddenly find themselves clobbered by reality, and with no means of escape.

Northern Rock reaches new heights of warped thinking by claiming that it is trying to reduce the level of cross-subsidy. Its decision - along with virtually every other building society - to treat existing customers as second-class citizens created the problem in the first place.

It would be a brave building society that promised to treat all its borrowers, new and old, the same. But it would get my mortgage for a start.