The first takeover of a regional electricity company by a foreign group was agreed yesterday, provoking a new row over executive pay as it was revealed that top managers of the UK firm stand to make more than pounds 1m.
South Western Electricity has recommended a pounds 1.1bn takeover by the American company Southern Electric International, after SEI offered shareholders pounds 9.65 a share. Under the deal, John Seed, SWEB's chief executive, will make about pounds 770,000. The figure includes compensation for termination of his two-year rolling contract at an annual salary of pounds 177,000, as well as profits from the exercise of share options and the sale of ordinary shares.
Bristol-based SWEB, which provides power for 1.3 million people in the West Country, said the bid, which compares with an earlier pounds 9-a-share offer from the Americans, was the "best offer available".
But Labour's employment spokesman, Ian McCartney, said: "They should be looking after the consumers, but they are just looking after themselves".
The shadow Chancellor, Gordon Brown, said: "This takeover highlights the shambles of privatisation, where the consumer is all but forgotten. We are seeing yet another local company destroyed, not in the interests of the customer, but in the interests of the boardroom."
The success of the deal hinges on a decision by Ian Lang, President of the Board of Trade, on whether to refer the bid to the Monopolies and Mergers Commission.
Mr Lang, whose decision on SWEB is due by 1 September, will also have to rule on a pounds 1bn hostile bid for Manweb by Scottish Power and on an agreed pounds 2.5bn offer for Eastern Electricity by the industrial conglomerate, Hanson.
Unions said they would be seeking urgent talks with the US firm about jobs. Paul O'Shea, deputy regional secretary of Unison, the biggest union at SWEB, said: "We understand that terms, conditions and pensions will not be affected but there are obvious concerns about jobs."
Tom Boren, president of SEI, said that his company was only looking at plans to cut up to 500 jobs from SWEB's 5,000 workforce over the next few years. But the expectation is that the cuts will be accelerated.Reuse content