Last week Southern of Atlanta, Georgia, said it would not table an offer until the Trade and Industry Secretary, Ian Lang, had decided whether to wave through bids by the two generators, National Power and PowerGen, for regional electricity companies.
The Government is widely expeted to approve the two mergers, leading to substantial vertical integration in electricity generation and supply. But yesterday it found itself facing further criticism in the shape of the European competition commissioner, Karel Van Miert.
Mr Van Miert allied himself with Labour and banckbench Tory opponents of the two mergers by warning that they would produce vertically integrated energy companies while European Union policy was heading in the opposite direction.
Last night, after discussions with advisers to National Power and Southern, the Takeover Panel released the US company from this undertaking, saying it was not now prevented from making an offer at any time.
Although Southern is not thought likely to strike before Mr Lang has made his announcement, the fact that it asked the panel for clearance to do so was being taken as an indication of its intentions.
The Government's ruling, which is due imminently, is expected to lead to a frenzy of stake-building, with National Power tipped to raid the market and increase its holding in Southern Electric and the Americans thought to be considering a similar raid on National Power shares.
If National Power gets the go-ahead to proceed with its agreed pounds 2.5bn offer for Southern Electric, it will try to push through the merger in 21 days. It already owns 8 per cent of Southern Electric and is widely expected to enter the market for further shares. It could increase its stake up to 30 per cent.
Southern could strike back with a knock-out cash offer for National Power, also with a three-week deadline, leaving shareholders with a straight choice.
A further option might be for Southern Company to launch a dawn raid on National Power shares and then use its stake in an attempt to persuade shareholders to vote down the National Power-Southern Electric merger at an extraordinary meeting.
The generator needs the approval of 51 per cent of those votes cast at an egm to proceed with the Southern Electric merger.
National Power shares drifted 9p lower to close at 596p last night while Southern Electric put on another 12p to 903p.
The National Power bid is worth 960p per share but it is allowing shareholders to take a second interim dividend of 27p, which in effect increases the value of the company's offer to 987p.
Van Miert alarm, page 20