Power purchase

Wednesday 12 August 1998 23:02 BST

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CALENERGY, the power plant developer, yesterday said it remained committed to its UK subsidiary, Northern Electric, after it agreed to buy MidAmerican Energy Holdings for $4bn (pounds 2.5bn) in cash and assumed debt. The deal is the first time an independent American power producer has bought a US utility.

CalEnergy will pay $27.17 cash for each MidAmerican share, a 36 per cent premium to MidAmerican's closing share price on Tuesday, and assume $1.4bn in debt and preferred stock.

MidAmerican, the largest utility in Iowa, has a network of power plants that burn coal, the lowest-cost fuel for electricity, and transmission lines that feed into the $6.3bn Chicago market, where electricity prices have historically been higher than other parts of the Midwest.

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