Electra toasts narrow victory over 3i

THE CHAMPAGNE corks were popping last night for Michael Stoddart, the chairman of Electra, after he saw off a pounds 1.25bn hostile bid from rival venture capital group 3i by the narrowest of margins.

After a day of high tension and several recounts by PricewaterhouseCoopers, the scrutineers, the Electra board announced just after 7pm that it had secured the backing of shareholders - representing 76 per cent of the votes - for the board's proposals to hand back 40 per cent of the capital and wind up the trust within five years.

3i had said before yesterday's vote that if the Electra board's proposals were accepted it would withdraw its cash-and-shares bid.

The board motion qualified as a special resolution and therefore required a 75 per cent majority to succeed. The votes cast for the resolution were 101.35 million, or 76.15 per cent, while the votes against were 31.75 million, 23.85 per cent.

It is believed that the late intervention by Swiss Re, the giant insurance group, swung the day. Just after the meeting adjourned for the count at 12pm it announced that it had bought 1.5 per cent of Electra at 750p and was going to vote in favour of the board.

It is also understood that Prudential, Electra's largest shareholder with 7.7 per cent, had switched sides. After indicating earlier in the week that it would either abstain or vote against the motion, it is understood to have decided to vote in favour of the Electra board.

Swiss Re accompanied the confirmation of its share purchase with a statement that it wanted to develop commercial relationships with Electra.

3i's adviser, Greenhill, was last night considering appealing against the vote on the grounds that the statement was highly irregular.

Yesterday's victory is particularly sweet for Mr Stoddart, 67, who after 20 years at Electra had been due to step down as chairman but had postponed his retirement to fight the 3i bid.

City analysts had been sceptical that the defence would succeed, particularly given the steep rise in 3i's share price in the past fortnight, which had increased the value of its bid. By last night it had risen from its 724p level when 3i made its offer final several weeks ago to 764p, against the 786p Electra was offering through its brokers, Cazenove, to buyback its shares.

After toasting the victory last night in a City winebar with his adviser, Jonathan Dawson from Lazard, Mr Stoddart was due to fly to Morocco for a well-earned rest.

Mr Stoddart said: "Everyone is happy. It was a lot of teamwork. The outcome is the right solution for the shareholders. I think now we want to get on and prove that we can deliver value for shareholders as we set out to do."