Trafalgar takes 5% at early stage

Trafalgar House marked the first deadline in its £1.2bn hostile bid for Northern Electric with acceptances from almost 5 per cent of shareholders. The acceptances are unusually high for this stage of a hostile bid and are thought to have come from the ranks of Northern's 100,000 private shareholders - until now controlling 20 per cent of the stock - and some smaller institutions.

Northern dismissed the results as insignificant and issued a further call to shareholders to reject the offer, hinting that a special dividend is on the cards. The company said: "The board has already announced its intentions regarding National Grid and its future dividend policy. Further measures to enhance shareholder value are currently under examination."

Northern has already said it will pass through to shareholders any special dividend it may receive from the National Grid Company, which is owned by the regional electricity companies and is expected to be floated. A special dividend separate from that related to the Grid is expected to be announced over the next few weeks.

Last week it emerged that Swiss Bank Corporation, adviser to Trafalgar House, now holds more than 5 per cent of Northern Electric's shares. The shares are held in a market-making capacity and cannot be used to vote in the context of the bid.

Trafalgar's deadline for acceptances is extended to 13 February, two days before an extraordinary general meeting of Northern shareholders, which is crucial if the bid is to proceed.