Welsh Water was last night poised for a hostile bid for Swalec, the South Wales electricity company, which yesterday rejected an informal pounds 843m offer.
Welsh Water said the indicative bid was worth 916p but Andrew Walker, chief executive of Swalec, said "It took us all of five minutes to reject it. It is a low value that is a long way from what the market is pointing to." He is planning to complain to the Takeover Panel about what he claims is Welsh Water's dithering over the last three weeks.
The shares closed last night at 890p, excluding the value of the company's National Grid stake, which is being given to shareholders.
Graham Hawker, chief executive of Welsh Water, said the indicative offer, which would include the Swalec plan unveiled yesterday for a special dividend, was worth 945p a share to pension funds, which will receive a tax credit.
He added that Mr Walker, who on Wednesday said a recommendable offer must be well above 900p a share, had said during discussions that he would be prepared to recommend a price less than 950p.
Asked whether he was about to launch a hositle bid Mr Hawker said: "We are considering all our options and a hostile bid is obviously one option open to us."
Mr Walker said he would be quite happy to "recommend an offer that was recommendable" but criticised Welsh Water for undervaluing the company, which yesterday reported half-year profits of pounds 60.4m before tax, compared with pounds 53.6m a year ago.
Mr Walker announced 100p a share special dividend costing pounds 92m, marking a change from previous plans to hand back cash to shareholders through share buybacks.