Uk Power Takeover Battle Sends Stocks Soaring

Last week, US power producer CalEnergy launched a 659 million bid for Northern Electric, another British regional electricity company. The two bids are the latest in a string of raids by US energy firms which see UK as a rich hunting ground.

Britains electricity industry was privatised a few years ago but the government had kept golden shares in the companies till two years ago to stop takeover bids. There have been a spate of takeover bids in the industry since the golden share lapsed.

Electricity industry analysts say that the latest bid is underpriced. Dominion Resources has offered 607 pence a share but analysts say that 700 pence would be a fair price.

 

In the other bid CalEnergy has offered a 21 per cent premium on Northern Electrics shares.

US companies have be particularly aggressive in Britain. Last year there were four bids for UK regional electricity companies by US companies. Also French company Lyonnaise Das Eaux has been trying to enter the British electricity industry.

Out of 12 regional electricity companies that were privatised in 1990 eight have now been taken over by new managements. The spate of takeovers has triggered a political controversy and allegations that the Conservative government has allowed the companies to be sold on the cheap. The opposition Labour Party has threatened to introduce a windfall tax to reduce the profits of the electricity companies.