US pair shrug off windfall threat with pounds 1.5bn Yorkshire bid

Two US power companies admitted they would have no problem affording Labour's planned windfall tax on the privatised utilities yesterday as they launched a joint agreed pounds 1.5bn takeover bid for Yorkshire Electricity.

The offer leaves Southern Electric as the last of 12 privatised regional electricity companies (RECs) neither taken over nor facing a bid. If the two US companies, AEP of Ohio and Public Service Colorado from Denver, gain control of Yorkshire, it will leave a total of seven RECs in American hands. The others are: Northern; Sweb; London; East Midlands; Midlands; and Seeboard.

Embarrassment at the latest foreign takeover approach spilled over into the Commons yesterday, with Michael Heseltine, Deputy Prime Minister, calling on other countries to allow outside bids for their utilities. He said he was "constantly urging the US and other countries to have open economies".

The Government is also likely to be on the defensive over the two bidders' reaction to Labour's proposed windfall tax. Linn Draper, AEP's chairman, said the US companies had examined various assumptions for the cost of the tax and had concluded they could afford it. He explained: "We wouldn't have made a bid if we didn't have a good example of the size." The comments were welcomed by John Battle, Labour's energy spokesman: "This just goes to show it's not the problem the Tories make it out to be."

The windfall tax bill would come on top of a possible pounds 30m which Yorkshire said it may be forced to pay back to its pensions scheme following a recent landmark ruling against National Grid by the Pensions Ombudsman.

Shares in both Yorkshire and Southern surged on yesterday's bid news. AEP and PS Colorado are jointly offering 927p a share for Yorkshire, 13.3 per cent above Friday's closing price of 818.5p. Yorkshire shares rose to 882p, a rise of just 7 per cent, reflecting some uncertainty over whether the bid would be referred to the Monopolies and Mergers Commission. Southern Electric gained 23.5p to 770p.

Christopher Hampson, Yorkshire's non-executive chairman said the offer was "very full and fair". He continued: "We held out for a good price. We didn't accept the price that they offered at first ... it was a hell of a lot less than they're offering now."

Analysts dampened speculation of a rival bidder appearing with a higher offer.

Sources close to PowerGen, the privatised generator, played down the possibility that it would bid for Yorkshire. PowerGen was blocked by the Government from buying Midlands Electricity last year but is thought to have been examining another bid for a REC should Labour win the next election.

The two US utilities said this was the first time they had made a joint bid, but had been eyeing UK utilities for several months. AEP and PS Colorado have a combined market value of $10.3bn (pounds 6.2bn) and supply 4 million customers. They said 25 per cent of the pounds 1.5bn purchase price for Yorkshire would be financed by equity with the rest from debt.

They hinted yesterday at a more aggressive approach towards the UK gas and electricity markets after domestic competition takes hold next year.

Comment, page 17

News
Ian Thorpe had Rio 2016 in his sights
people
Sport
Jonathan de Guzman of the Netherlands and Willian of Brazil compete for the ball
world cup 2014LIVE BLOG: Hosts Brazil take on the Netherlands in third-place play-off
News
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

PROMOTED VIDEO
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
life...and the weight loss industry is rubbing its hands in glee
Voices
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
Arts and Entertainment
'Eminem's recovery from substance abuse has made him a more potent performer, with physical charisma and energy he never had before'
arts + entsReview: Wembley Stadium ***
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice