The Southern Company, one of the largest US utilities, has swooped on South Western Electricity, buying 11.2 per cent of the shares.
Sweb, long rumoured as a potential takeover target, confirmed that it has agreed to meet the predator today and urged shareholders to take no action.
The shares were bought on behalf of Southern in a market raid by SBC Warburg at a price of 900p, which values Sweb at about pounds 1bn.
The company's shares jumped 109p to close at 910p.
John Seed, chief executive of Sweb, said he would make no judgement until after today's discussions. "One always has to be prepared for this sort of eventuallity and we were. We are not saying whether this move is welcome or unwelcome. We will listen to what they have to say."
He added: "We have to take into account the interests of all our stakeholders - staff, shareholders and customers."
Sweb is being advised by Schroders, which has also been appointed by Northern Electric in anticipation of a renewed bid by Trafalgar House. Mr Seed said he sees no conflict in the bank's role.
The investment in Sweb is being handled by Southern Electric International, the global arm of The Southern Company. SEI is already in partnership with its British namesake, Southern Electric, to bid for power plants owned by the generators, National Power and PowerGen.
A spokesman for the US group declined to say whether it plans to mount a full bid. Thomas Boren, president and chief executive of SEI, said: "Our intention now is just to sit down and talk to the management."
It is understood that the US group would be willing to remain a substantial minority shareholder in the electricity supplier.
Mr Boren said that SEI had been watching the UK electricity sector for a year and had looked closely at the regional electricity companies for six months. But it had no plans at present to invest in other regional companies:
"We just wanted to invest in a smaller company. We are just doing one investment," Mr Boren said:
Industry sources said that Sweb would be likely to attract a white knight, possibly a larger regional company.
Southern Electric of the UK, which stressed it is in no way linked to SEI's raid, has long been seen as a potential suitor for its smaller neighbour and has said publicly it is interested in a merger with another supplier.Reuse content