Yorkshire Electricity is to pay a pounds 1 special dividend at a cost of more than pounds 180m and will consolidate its share capital in January 1996. The company also promised to distribute ''most" of its 9.2 per cent stake in the National Grid Company to shareholders when the grid is floated at the end of the year.
The dividend, which falls short of a pounds 300m payout expected by some City analysts, will leave the company with a ratio of borrowing to shareholders' funds of 75 per cent. Malcolm Chatwin, chief executive, rejected the suggestion that the dividend is a pre-emptive move to fend off a potential bid for the group. "This is really just implementing the strategy we have already indicated, which is to return value to shareholders. This takes us as far as we want to go at the current time," he said.
Yorkshire also said it plans ordinary dividend increases of 10 per cent this year and next compared with annual increases of about 15 per cent over the last few years. The company attributed recent improvements to better cost control in its electricity distribution and supply operations and said that further efficiency gains are in train.
City analysts have focused on Yorkshire Electricity in recent weeks as one of the next targets for a takeover bid, but the company declines to comment on whether it has received an approach. Mr Chatwin said: "Our position is that we can go forward successfully as an independent company." But he added that the board would examine any proposal that would enhance shareholder value.
The sector is awaiting the next move of Houston Industries, which as part of Texas Energy bid unsuccessfully for Norweb.