Outlook: Empire building on the Oregon trail

THE CORPORATE history books are littered with the corpses of British companies who thought it would be a good idea to buy a business in the United States. At the top of the funeral pyre are retailers and banks, but now along comes a utility determined to throw itself into the fire. At least ScottishPower should have no difficulty providing the spark

At the start of business yesterday its all-paper merger with PacifiCorp was worth nearly pounds 13bn. By the close of play, it had melted down to pounds 11.5bn, which just goes to show the kind of margin of error ScottishPower is playing with.

The salutary experience that the US utilities underwent when they came over here and picked off two-thirds of our regional electricity companies has not been enough to deter Ian Robinson, ScottishPower chief executive. Two have returned home with their tails between their legs, another split its Rec in half and a further three are on the block.

PacifiCorp is 8,000 miles away and governed by a regulatory regime as different as the Atlantic is wide, but the Scots still believe they have plenty to teach the backwoodsmen in Oregon. Unfortunately, the novelty of the US regulatory system is that the more profit the Scots make, the more they will end up sharing the spoils with the customer - always supposing they can achieve the $200m of annual cost savings already targeted. Not like here, where the spoils of efficiency gain go to investors.

Oregon is rich in natural beauty and charm, while all those air miles will keep the Scots and their children in free flights from Glasgow to London the whole year round. But the management headaches alone of running a business on the other side of another continent make this one piece of corporate empire building that will all too probably end in tears. It is hard to see how this merger adds value to either party.