Scottish Power bid for Manweb should go to MMC, rival says
Wednesday 26 July 1995
John Baker, the chairman of National Power, yesterday called for Scottish Power's pounds 1bn bid for Manweb to be referred to the Monopolies and Mergers Commission. Scottish Power, which launched its bid on Monday, attacked Mr Baker, saying that the takeover would, if anything, increase competition.
It also emerged that Scottish Power bought a further 1.82 million shares in Manweb, bringing its stake to 9 per cent. Manweb's share price fell by 2p to 915p yesterday, which matches the cash alternative in the bid.
Mr Baker, who was speaking at National Power's annual general meeting, said that the takeover "raises regulatory issues", but did not elaborate. He also said his company is unlikely to emerge as a bidder for one of the 12 regional electricity firms in England and Wales. "In principle, we are not interested in expanding our exposure to the UK regulatory regime. Secondly, I very much doubt whether competition authorities would allow us to," he said.
Manweb is the third company to become a target. South Western Electricity is the subject of a pounds 1bn takeover attempt by Southern Electric International of the US. Northern Electric is braced for a renewed bid by Trafalgar House after the lapse of an offer at pounds 11 per share in March.
The Consumers Association yesterday joined the fray, asking all bidders to say what they would do for customers. Philip Cullum, the CA's policy manager, said: "So much attention is focused on shareholders, but the bottom line should be whether they are going to give good value to customers."
Speculation over further takeovers and mergers coincided with a stark warning from the all party Trade and Industry Select Committee of big problems in the competitive electricity marketplace.
The Government plans to end the 12 regional monopolies over domestic customers in 1998 but there is growing concern that too little preparation is taking place.
Richard Caborn, chairman of the committee, said: "Government proposals to open up the electricity market in 1998 are a shambles and could bring disruption to the industry.
"The committee was astonished by the complete failure of the Government and the regulator, Offer, to prepare for liberalisation. The proposals have not been thought through and could represent a disaster in the making."
The committee wants an extensive trial - such as that planned for the gas market in 1996 and 1997 - before the market is fully liberalised.
Mr Caborn said there is a need for regulatory reform before the market is opened, with more power for consumer groups and a duty on the regulator to justify its decisions. He added that there is a "compelling case" for joint regulation of electricity and gas supply.
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