The white knight was Southern Electric, the next-door electricity company, which was considering beating the existing offer by Southern Company of the US by more than pounds 100m - and throwing in a rebate to electricity consumers thought likely to have been at least pounds 5 a head.
But just as the stock market closed last night, the white knight stunned South Western by withdrawing from the fray - within hours of confirming that the negotiations were under way. The company blamed failure to get assurances from regulators that there would be no monopolies reference.
There were suggestions in the market that the Stock Exchange is likely to investigate the timetable of the announcement - which was precipitated by a leak - and the sudden withdrawal, because of the sharp changes in share prices.
The news came after the market had closed, and is bound to lead to turmoil in the shares on Monday. South Western shares had soared 21 p to 940p on the announcement of the talks and Southern Electric had dropped 47p to 731p on worries about the difficulty of financing the bid, given the extra cost of a consumer rebate.
The turnround was an embarrassment for John Seed, chief executive of South Western, and his board, who are understood to have been angered by the rapid end to negotiations, which have been under way for two weeks.
Customers are now highly unlikely to receive a rebate, because the idea was based on indications from Professor Stephen Littlechild, the electricity regulator, that mergers between regional electricity companies should include a reward for consumers so they share in the efficiency gains expected to result. The Southern Company bid is from a foreign organisation and no such conditions have been suggested.
Henry Casley, chief executive of Southern Electric, the UK company, said "We had to make a judgement of whether we could have made a bid without a reference and our judgement was no, we could not."
Mr Casley said his remarks implied no criticism of the Office of Fair Trading, Offer, the electricity regulator and the Department of Trade and Industry, and he fully recognised that there were difficult areas.
Mr Casley said that Southern had planned a board meeting yesterday afternoon to consider what had been a careful analysis of all the feedback from its discussions with the authorities over whether the bid would receive the appropriate regulatory approvals.
The meeting was planned before the leak of the discussion of an agreed deal. Mr Casley said that even if there had been no leak, the board would undoubtedly have come to the same conclusion: "What we would have done would have been to have had a quiet telephone call [to South Western] and not paraded it in public," he said. Mr Casley and Mr Seed know each other well because they worked together for four years at Eastern Electricity.
Southern Electric's problem was that there might not be a reference of the US bid for South Western, but it is quite likely that a South Western and Southern Electric alliance would be referred.