City questions price of ScotPower's US deal

SHARES IN ScottishPower fell 10 per cent yesterday as the market questioned whether the group overpaid in buying the US utility PacifiCorp for pounds 4.2bn, writes Michael Harrison.

The all-share deal turns ScottishPower into one of the world's 10 leading utility companies, but leave it with pounds 5.5bn of debt and a pounds 1.9bn goodwill write-off.

Ian Robinson, ScottishPower chief executive, said the deal would be earnings- enhancing from the first full year.

The transatlantic deal will be accompanied by a pounds 500m share buyback. Analysts also expect ScottishPower to speed up flotation of its Scottish Telecom subsidiary, worth pounds 1.2bn.

The group brushed aside prospects of a rival cash bid for Oregon-based PacifiCorp. It said that although this is the first foreign takeover of a US utility, it expected regulatory clearance within six months. Some analysts believe approval will take 12 to 18 months. Mr Robinson will be chief executive of the enlarged group.

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