Sweb yields to pounds 1.1bn Southern Electric bid


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

On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
scotland decidesIs a huge gamble on oil keeping First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
Arts and Entertainment
Lionel Messi in action for Barcelona
filmSo what makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Life and Style

Olympic diver has made his modelling debut for Adidas

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week