pounds 1.6bn US offer for Seeboard

Power games: Americans lock out rivals with high bid for Rec as loss-making shops are sold to conglomerate

PETER RODGERS

Business Editor

The US power company Central & South West Corporation yesterday launched an agreed pounds 1.6bn bid for Seeboard and snapped up 23.9 per cent of the shares in the market.

The price was the highest so far for a regional electricity company and was regarded as a lockout of potential rivals.

The rivals include Houston Industries, whose senior executives are booked into a London hotel later this week to resume their quest to buy a regional electricity company. Houston was CSW's partner in a pounds 1.8bn bid for Norweb, which was lost to North West Water. The two American firms have since decided to go their separate ways.

With only five of the regional electricity companies left - including Northern, whose bidder, Trafalgar House , withdrew - the number of available targets is shrinking rapidly.

The share prices of South Wales, Yorkshire, London, East Midlands and Northern all rose sharply as the City looked forward to the next phase of the takeover spree. With nearly a quarter of Seeboard snapped up by CSW's broker, UBS, there seemed little prospect of a counter-bid for the latest target.

CSW and Houston are unlikely to be blocked by a monopolies reference, following clearance earlier this autumn of the bid for South Western by Southern Group of the US.

Sir Keith Stuart, the pounds 70,000-a-year non-executive chairman of Seeboard, is to leave after the takeover without compensation, bonus or share option profits, underlining the robust stance he has taken on pay in the electricity utilities.

He attacked in public the decision of National Grid directors to take up a special dividend when the company is floated next month. Seeboard owns 7.3 per cent of National Grid.

The executive board members of Seeboard, who have no bonus scheme, are nevertheless set to make profits of pounds 1.5m before tax on their share options - although this is relatively modest set against the rewards available to some of the other 11 regional electricity company boards.

The highest option profits will be made by Jim Ellis, the chief executive, who is to become chairman and stay on to run Seeboard for the Americans.

His options are showing a pre-tax profit of pounds 550,000, while those of Stephen Gutteridge are worth pounds 495,000 in pre-tax profit. Tony Smith has made pounds 214,000 and John Weight pounds 226,000. The executive directors are remaining on board so will not be receiving any compensation other than option profits as a result of the takeover.

Tom Shockley, president and chief executive of CSW, said: "We are proud of the price we have been able to offer. It's a high price compared to the sector. These companies aren't all the same. We have done a great deal of careful evaluation."

Sir Keith said Seeboard was the best-rated electricity company with an excellent track record in creating value for shareholders. The bid price of 635p a share is the equivalent of 1270p after adjusting for a previous two-for-one scrip issue, well ahead of the price of any rival. Last night's close was 628p.

Mr Shockley said Seeboard would keep its name and continue to develop its existing strategy, which includes a move into gas supply in partnership with Amoco. There are also plans to invest more in electricity generation. There are to be no additional job losses, beyond those already built into the current three-year strategy.

Mr Shockley would not rule out a bid for another British electricity company but said it was not part of current plans.

It also emerged that Scottish Hydro-Electric, the generator, is assessing the possibility of buying a power supply business from one of the regional electricity companies.

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