Manweb falls into arms of Scottish
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Industrial Correspondent
Scottish Power won the UK's first hostile battle for a regional electricity company yesterday, clinching a pounds 1.13bn takeover bid for Manweb.
The takeover, the largest in the sector so far, was confirmed two hours after the bid closed, when the Scottish group announced it owned, or had acceptances for, more than 60 per cent of Manweb's shares.
The victory came despite the decision by the Prudential Corporation, which owns 8 per cent of Manweb, to throw its weight behind the regional firm's board. About two-thirds of Manweb's small private share holders also refused to sell.
The takeover prompted a renewed warning from the Labour Party that it would consider a wholesale referral of the electricity industry to the Monopolies and Mergers Commission.
Jack Cunningham, Labour's trade and industry spokesman, said the bid should have been referred by Ian Lang, President of the Board of Trade. "Ian Lang's foolish and stubborn refusal to refer the bid to independent scrutiny sets an important precedent. We cannot proceed with the piecemeal restructuring of the electricity industry without an independent examination of whether the public interest is being served," Dr Cunningham said.
Ian Robinson, chief executive of Scottish Power, said he hoped to meet with John Roberts, his counterpart at Manweb, on Monday. "We are delighted to be where we are. We broadly expected to be where we are but it's always better when you get there."
The cost to Scottish Power of the bid battle has been about pounds 36m, including underwriting fees. There is speculation that the takeover frenzy in the sector has already opened a treasure chest worth more than pounds 200m in fees for brokers, public relations advisers and merchant banks.
Mr Robinson declined to comment on rumours that Scottish Power will now turn its attention to yet another regional firm: "Our focus is on Manweb for the forseeable future."
Mr Roberts said: "We are disappointed with the result. We sought to obtain the best value for shareholders and we achieved a higher offer against an uncertain regulatory and political environment." He confirmed that he will meet Scottish Power next week to "ensure the smoothest transition" for Manweb's customers and employees.
Scottish Power's original offer in July was pounds 9.15 cash and pounds 9.45 in cash and shares, but was later increased to pounds 9.90 cash with a cash and share alternative now worth more than pounds 10. Scottish Power's shares rose by 6p yesterday to pounds 3.58 and Manweb's gained 10p to close at pounds 10.05.
The sector is now awaiting a possible second renewed offer by North West Water in its bid for Norweb, in the face of a competing bid from Texas Energy Partners. The Office of Fair Trading yesterday requested an extension until 3 November to deliver its advice to the Government on whether North West's bid should be referred.
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