Shareholders back bid for Energy
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Your support makes all the difference.The pounds 3.6bn agreed takeover of Energy Group, owner of Eastern Electricity and the US coal producer Peabody, by the American utility PacifiCorp is expected to be announced early next week after the deal received a positive response from institutional shareholders yesterday.
A dozen or so large UK and US investors, including Norwich Union, Scottish Mutual, Morgan Grenfell, Schroders, Clerical Medical, Merrill Lynch, Duff and Phelps and State Farm are thought to have indicated their backing for the bid.
Shares in Energy Group rose 61.5p to 641.5p yesterday, valuing the company at pounds 3.34bn. On Tuesday it said that the recommended bid was likely to be pitched at just under 700p.
PacifiCorp, one of the largest US utilities with a market capitalisation of $6bn (pounds 3.9bn) is expected to pay in cash and there is speculation that it will embark on a series of asset disposals to help fund the bid.
One possible candidate for sale would be its telecoms business, Pacific Telecom, which serves 10 states in the western US and has revenues of about $600m.
The UK electricity regulator, Professor Stephen Littlechild, is understood to have been sounded out about the bid and there are not likely to be any regulatory hurdles. Professor Littlechild cleared each of the seven previous bids by US utilities for British RECs without conditions and the PacifiCorp-Energy deal presents no obvious competition concerns.
Sources close to the deal also argued yesterday that it ought not to run into political opposition since there would be no job losses at Eastern Electricity and Margaret Beckett, President of the Board of Trade, has made it clear that the primary consideration in merger cases will continue to be competition.
Although Energy Group's executive chairman, Derek Bonham, would be in line for a pounds 900,000 pay-off, PacifiCorp is thought to be keen to hold on to the senior management.
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