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

Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
ebooksAn unforgettable anthology of contemporary reportage
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments