Outlook: Devaney lights up National Power

IF YOU are contemplating a pounds 7bn break-up bid for National Power, then where better to contemplate it than in the middle of the Mediterranean? John Devaney can currently be found, en famille, just off the north-west coast of Corsica, birthplace of Napoleon. He has dropped anchor close to Calvi but still has plenty of time to check the satellite fax in between taking the dinghy into town for the bread run.

Contemplating a bid, of course, is one thing. Executing it is quite another. Before he does anything else, Mr Devaney intends to enjoy the rest of his three-week holiday - down to Sardinia and then back around the islands to Cap Ferrat. It's a hard life.

Then he has to decide whether he is going to quit his present job with the Energy Group, where he is chairman of Eastern Electricity. The Texans who now own Energy Group are, by all accounts, keen to keep him.

Then he has to decide whether he has the stomach for a bruising assault on a business which enjoys the added protection of a Government golden share. Then he has to raise the money. If those banks who have been whispering in his ear think pounds 7bn will be enough then they are supreme optimists.

All in all, it is easy to see why beachcombing in the Med might have more appeal.

Nomura has been touted as a possible backer for the bid. But Guy Hands who runs its principal finance group, has been frightened off the sector once - when the bid target incidentally was Energy Group.

True, National Power may not be flavour of the month with either ministers or regulators. But the prospect of a Japanese bank mortgaging off its power stations in order to make a quick buck for a handful of fancy City banks, scarcely looks like a more appealing proposition.

There is a more substantive reason why a bid right now would look like the product of dozing too long in the sun. Nobody, including Mr Devaney, has the faintest idea what they would be buying. The industry watchdog, Stephen Littlechild, has got his teeth deep into National Power's rump and is convinced that the only way to open up the electricity market is to slice the two big fossil-fuel generators in half.

Mr Devaney's fall-back position is to create a vehicle to acquire some of that generating capacity, either from Nat Power or PowerGen. That still looks a better bet.

It would be surprising if Mr Devaney rates the chances of pulling off a hostile bid at much above 5 per cent. Food for thought as he laps up the Corsican scenery. With those sort of odds he could be staring at his own personal Waterloo