Panel poised to reject new bid by Trafalgar

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The Independent Online
The executive of the Takeover Panel is poised to reject proposals by Trafalgar House for an immediate renewed bid for Northern Electric following the lapse of an £11-a-share offer.

Trafalgar is expected to appeal to the full Panel to be allowed to proceed with the lower hostile £9.50 offer. Approval would be unprecedented and rejection means that Trafalgar might have to wait for a year.

The executive's decision comes as Northern caved in to shareholder pressure to allow a new bid by Trafalgar House, but only when the regulator, Professor Stephen Littlechild, clarifies his position on future electricity price controls. This may not be until the end of June and even then, regulatory uncertainty could drag on for months.

Northern's qualified go-ahead angered Trafalgar House. Northern also made it plain that agreeing to allow a bid did not mean that it would be recommended by the board.

A spokesman for Northern said: "We cannot put the full facts to shareholders until Professor Littlechild speaks on prices but we are not hiding behind the 12-month rule. We will let them proceed with a hostile bid once the regulatory position is clear."

Trafalgar, which has gained support from shareholders with 50 per cent of Northern in its drive to be allowed to launch a new bid, said: "It is Trafalgar's view that the only fair way to protect Northern's shareholders' interests and resolve market uncertainty is to allow a revised bit to proceed immediately." The company argues that the case is exceptional as the £11-per-share offer lapsed last week only because the threat of tougher price controls sent electricity shares plummeting in value. Northern Electric's shares rose by 32p last night to £8.21.

James Watkins, Trafalgar House's director for legal affairs, said: "This statement by Northern is presented as a reasonable compromise. It is in effect an attempt to achieve what it wanted, that our bid should fall away."

A spokesman for Wyser-Pratt, a US investor in Northern, said: "Under pressure the board has remembered that the shareholders exist but we are still some way from satisfaction."