Jeremy Warner's Outlook: Can pay but won't pay, says E.ON, leaving ScottishPower's Russell with plenty to prove

Ian Russell must already have been worried enough about his position as chief executive of ScottishPower, but he'll be doubly so after the ringing endorsement he received yesterday from his chairman, Charles Miller Smith. As takeover talks with E.ON of Germany collapsed in disarray, Mr Miller Smith expressed complete and absolute confidence in his chief executive. This is usually code for the axe being about to fall.

As it happens, Mr Russell very probably does still retain the confidence of the board. Yet the confidence of the City is another matter, and after the third disappointment in a row, he's living on borrowed time. The 570p a share eventually bid by the Germans was yesterday dismissed by Mr Miller Smith as "completely unrealistic", which may or may not be a fair assessment.

Regrettably, the stock market isn't prepared to offer a "realistic" valuation either, and with the shares falling 5.5 per cent yesterday to 538p, many holders would have been more than happy to take the Germans' money.

The ScottishPower board refused to be drawn on just what would have been acceptable, but according to the German camp the price demanded was round about the 650p mark, a level which they in turn regarded as "completely unrealistic" too.

Yet to be fair, there would have been problems with the German offer even if there hadn't been such a yawning gap in valuation. The offer was conditional not just on the yet to be completed disposal of PacifiCorp to Warren Buffett, but on regulatory clearance in Europe too, which E.ON admitted might take until March 2007 to secure and possibly longer.

E.ON is already a substantial player in the UK energy market. Together with ScottishPower, it would have accounted for about 30 per cent of domestic electricity supply. There would have been a very high degree of concentration in distribution and generation too.

It's hard to see who else might convincingly bid for Scottish-Power. Scottish & Southern would seem to face even greater regulatory hurdles and if the Germans think ScottishPower worth only 570p, it's impossible to believe the famously parsimonious Scottish & Southern chief executive, Ian Marchant, would bid more. Meanwhile Centrica has already admitted that the regulatory obstacles would be insurmountable, and EDF has made clear it doesn't for now want to add to its British assets.

Applying the baseball rule of "three strikes and you're out", Mr Russell should already be staring at his P45. Both diversification strategies, first with Southern Water and then with PacifiCorp, have been reversed, each one at a thumping great loss. Now takeover talks have stalled too.

Mr Russell is not yet out, but despite the promise of better dividends yesterday, he's got quite a task ahead of him convincing the City he's the right man for the job, or indeed getting the share price back above 570p, let alone 650p.

London reigns in battle of exchanges

Time was when the New York Stock Exchange was the only place to be when it came to international share listings. Rarely a week would pass without Dick Grasso, the NYSE's diminutive chairman, welcoming some overseas behemoth to the big board, sometimes, showman that he was, with comically appropriate theatre. He once even brought a live lion on to the floor with him.

Happy days. This was before Enron, and the discovery that Mr Grasso metaphorically had his fingers in the till as well. Since then we've had Sarbanes Oxley, a root and branch crackdown by the SEC and new American accountancy rules fair to make the mind boggle. Today, companies would pay not to be listed there. Many are having to part with millions in lawyers fees in order to delist, for once there, the SEC won't let you go without a struggle.

This is an extraordinary act of wanton self-destructiveness by the Americans, but then you cannot teach common sense and New York's loss is London's gain. Today the exchange of choice for overseas listings is our very own London Stock Exchange, made ever more welcoming to our overseas friends by the City's light regulatory touch and the growing attractions of London as a home and base for the world's super rich.

The achievements of the Alternative Investment Market, whose motto should be "anything goes", are well chronicled, but even the main listed market, where the rules are more demanding, is achieving growing success. The latest company to announce plans for a flotation in London is Novolipetsk Steel, one of Russia's largest steel makers. Few would have imagined, even five years ago, that the apparently dying steel sector would ever have its ranks expanded beyond the sorry looking Corus, the remnants of the old British Steel. Today, London is a centre not just for metal trading, but for miners and mill owners alike.

All of which brings me by a round about route to the increasingly ridiculous battle for control of the London Stock Exchange. That the LSE finds itself being fought over by such an array of obviously less worthy pretenders stands as testament to past errors in strategy and management. Still, we are where we are, as Tony Blair would say, and the LSE has been under siege now for the best part of a year. The latest assailant to join the fray is Macquarie, the Australian investment bank, possibly in conjunction with Goldman Sachs.

Macquarie should have been told by the Takeover Panel to put up or shut up ages ago, but the panel has failed to act, apparently persuaded by the argument that Macquarie cannot be ordered to bid or go away unless the same treatment is meted out to Euronext, owner of the Paris bourse.

Like Deutsche Börse, Euronext has pretty much given up on the idea of making a full-scale cash takeover bid. Its shareholders wouldn't tolerate the necessary premium. Yet it continues to entertain hopes of a nil-premium merger. Rightly, London wouldn't agree such a deal unless the whole enterprise were redomiciled and listed in London. Would the French submit to such conditions? It's not altogether impossible, but national sensitivities and egos make it extraordinarily unlikely.

As for Macquarie, the Aussies would need to jack up transaction charges by such an extent to pay down the debt on the deal that no user in its right mind would accept. The possible involvement of Goldman Sachs, one of the exchange's major users, only further muddies the waters with potential for conflict of interest. The sooner the panel calls time on this desperate charade, the better.

Google should beware the backlash

Do Google's ambitions know no bounds? The latest front in the search site's bid for world domination is a project to put the world's cultural memory online. This essentially involves creating digital copies of everything held in national libraries and publishing them on the net, which is all very well, but what's its purpose?

Why, for the greater betterment of mankind of course. Believe it if you will. Sergey Brin and Larry Page, Google's founders, have so far made themselves an awful lot of money from their selflessness, and that's the plan here too - to create another vast pool of free content to feed Google's appetite for advertising revenues.

Google works as a business model because it has managed to persuade content providers that it is better to be up there on the net for free than condemned to paid-for obscurity. However, attitudes are changing, and they are doing so in inverse proportion to the damage Google is doing to content providers by eating into established sources of advertising revenue.

Google is at root just a brilliant con trick. You persuade people to give you their work for free and then you steal their income as well. It should beware the backlash.

j.warner@independent.co.uk