Sweb yields to pounds 1.1bn Southern Electric bid

MARY FAGAN

Industrial Correspondent

South Western Electricity yesterday agreed a new pounds 1.1bn offer from the American by Southern Electric Internat- ional. The terms, which include the payment of a special dividend, have been raised from 900p to 965p a share, seven weeks after the American's first raid on the UK firm.

The US group followed its announcement with a stock market swoop on Sweb's shares spending about pounds 166m to take its stake to 29.9 per cent from 14.4 per cent. The shares were bought at the pounds 9.65 offer price compared with Sweb's closing price last night of pounds 9.51, up from pounds 9.12.

The deal sparked a political furore when it emerged that Sweb chief executive, John Seed, who will retire, could make about pounds 770,000. The sum includes compensation for his two-year rolling contract at an annual salary of pounds 177,000, as well as profits from the exercise of share options and the sale of his existing shares.

The agreement prompted Scottish Power, which is locked in a pounds 1bn hostile bid battle for Manweb, to seek fresh talks for agreement,which was immediately rebuffed. Scottish Power said yesterday that the Sweb bid price makes it own offer for Manweb appear generous. Scottish Power is offering pounds 9.15 in cash with a cash-plus-shares alternative of about pounds 9.76 at the present market price.

The takeover by Southern Electric International could yet founder if the Government decides to refer it to the Monopolies and Mergers Commission. The parties had hoped for clearance by yesterday but the Department of Trade and Industry has until 1 September to decide.

The DTI may wait to announce its views along with those on the Scottish Power/Manweb case - on which the Office of Fair Trading has yet to advise - and on the pounds 2.5bn agreed bid for Eastern Electricity by Hanson. The bid for Manweb is regarded as the most likely to be referred. But some analysts said that the Government could send all three to the Monopolies and Mergers Commission to establish some rules for the sector as a whole. Tom Boren, president of Southern Electric International, said: "We see no competition reasons that would cause this bid to be referred." He also said that Sweb's customers would enjoy continued focus on value for money and high standards of service.

Under the terms of the agreement, both Mr Seed and Sweb's chairman, Maurice Warren, will retire. A new chief executive officer will be appointed from SEI's parent, the US Southern Group. Mr Boren said, however, that he had "tremendous respect" for Mr Seed and hoped that he would act as a consultant to Sweb.

The takeover battle has cost Sweb about pounds 10m in fees for its various advisers and consultants. Mr Boren said that SEI's bill is similar "plus or minus 10 to 15 per cent".

The acquisition is expected to accelerate job-cutting plans at Sweb, which previously aimed to reduce the workforce by about 500 by the end of the decade. Mr Boren reiterated his view that the US utility can make available to Sweb "expertise which it does not have at present".

The offer of pounds 9.65 compares with the "north of pounds 10" which Sweb said had been agreed in talks with neighbouring Southern Electric of the UK, which then collapsed.

The offer consists of pounds 9 in cash plus a 65p special dividend which is payable when the deal goes through. Some shareholders will be entitled to claim a tax credit relating to the special dividend, which would bring the total to pounds 9.81.

Shareholders will also receive the Sweb final dividend of 20.3p, payable on 2 October.

About 100,000 private shareholders have an average 200 to 250 shares in Sweb, which they can now cash in for about pounds 2,000 to pounds 2,500.

A potential stumbling block for SEI is the Sweb stake of 6.3 per cent in the National Grid Company, which is expected to be floated later this year, raising an estimated pounds 4bn. The Government wants the regional electricity companies to dispose of their stakes, but Mr Boren made it clear he would like SEI to retain some holding.

Comment, page 19

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

SThree: Trainee Recruitment Consultant

competitive: SThree: Are you passionate about sales?Do you have a keen interes...

Recruitment Genius: Loan Adviser - OTE £30,000

£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Day In a Page

Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Wimbledon 2015: Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Serena dispatched her elder sister 6-4, 6-3 in eight minutes more than an hour
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy