Advisers' hefty bill for Hyder

Hyder, the Welsh water and electricity utility, is paying City firms led by JP Morgan and Dresdner Kleinwort Benson an astonishing £20m for advisory work on the farcical bid battle which ended on Thursday, writes Jason Nissé.

Hyder, the Welsh water and electricity utility, is paying City firms led by JP Morgan and Dresdner Kleinwort Benson an astonishing £20m for advisory work on the farcical bid battle which ended on Thursday, writes Jason Nissé.

The costs for Hyder are more than the combined expenses for the two rival bidders - Western Power Distribution and Nomura - despite the fact that Hyder never attempted to defend itself from the bids.

The battle for Hyder has raged since April when the company agreed to a bid from Nomura at just 260p a share. A month later WPD, an American joint venture, entered the fray bidding 300p.

The bid descended into farce a week ago when the Takeover Panel set a final deadline for bids, but WPD's winning offer of 365p a share was not sent to the Stock Exchange in time because of technical problems.

Nomura's appeal that the offer was not valid was rejected and it withdrew from the bidding on Thursday.

The Japanese bank still has a 16 per cent stake in Hyder but is expected to sell it to WPD, making a profit of £25m.

It will also receive £4.5m from Hyder as compensation for not proceeding with the agreed bid. This amount is expected to cover Nomura's expenses almost exactly.

WPD's costs are likely to be higher, but not by that much.

Hyder justified the £20m fee to its advisers by saying that they were hired for the company's entire strategic review, which has gone on for 18 months.