Trafalgar set for counter-attack

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The Independent Online
The row over Trafalgar House's £1.2bn hostile bid for Northern Electric will resurface this week when Trafalgar issues its response to the Northern Electric defence, writes Mary Fagan.

Trafalgar is expected to argue that Northern's share price has languished well below the £10.48 cash offer and that allegations that the bid undervalues Northern are nonsense.

The response, which could come as early as today, is also likely to stress the regulatory pressures facing Northern and other regional electricity companies.

Offer, the watchdog, has announced sharp cuts in electricity distribution prices to come into effect in April this year, to be followed by an inflation-linked cap.

Trafalgar is also arguing that there is no possible case for the bid to be referred to the Monopolies and Mergers Commission. Northern has attacked the bid as a threat to customer service and as against the public interest. However Trafalgar is expected to rebuff this with guaratees that it will provide transparent accounts on the electricity company along with any other information required by the electricity regulator, Offer. It also says that Northern Electric headquarters will remain in the North-east.

Professor Stephen Littlechild, director-general of Offer, is thought to have given the go-ahead for the bid. His opinion is likely to form a central part of the Office of Fair Trading's consideration of the issue.

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