Time to show or go in Atlanta

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It is, as they say in Atlanta, Georgia, fast approaching time to show or go. Will the good ol' boys from Southern Company take the plunge and bid or will the poison pill of National Power's increased offer for Southern Electric prove too much even for American stomachs?

The men from Atlanta have in some ways boxed themselves in by relying too much on old-fashioned British fair play. They said last week that they would not come up with an offer for National Power until the Government had decided whether to clear the way for an orgy of vertical integration in the electricity industry. John Baker of National Power, who knows a thing or two about how to play his cards in Whitehall, is not allowing himself to be inconvenienced by such formalities as ministerial pronouncements and MMC reports.

While the Americans have sat on their hands, watching ever more incredulously, he has been busy unscrewing the fixtures and fittings with such gusto that Southern may hardly recognise the place even if they do get to move in.

The odd power station or three is missing but, never mind, here's another regional electricity company to go with the one you already own.

Shareholders in National Power could be forgiven for feeling more than a little bemused. Nor does it help when the potential suitor for your company happens to go under the same name as the one it intends to seek your permission to buy. But perhaps they should content themselves in the knowledge that right now their shares are a one-way bet.

The multiple of earnings National Power is offering for Southern Electric is right at the top of the range and perhaps it might have got more out of Hanson for the generating capacity it is buying to add to its own REC, Eastern.

There is plainly a danger that National Power will end up overpaying in its anxiety to escape the clutches of the Americans. But recent history has shown us that it is extraordinarily difficult to pay too much for a regional electricity company.

In any case, if Mr Baker is as good as his word then the two deals it has stitched together in the last six days, allied to declining dividend cover, will do wonders for his ability to reward shareholders. Phrases like "very significant earnings accretion" are not ones that easily pop from the mouths of merchant bankers and lawyers when drafting offer documents.

The alternative prospect is of the Americans throwing silly money at National Power, notwithstanding their efforts to talk the price down in the last week. It is hard to believe that Southern had not already factored in the possibility of a scorched-earth defence from National Power.

After all its advisers, SBC Warburg, know a thing or two about such matters from the Trafalgar-Northern battle where its two former halves acted on opposite sides of enemy lines.

Southern's exorbitant rating, coupled with low US interest rates and the phlegmatic approach Wall Street takes to highly-geared utilities certainly enable it to pay top dollar. It is hard to see the Americans having gone this far only to turn away.