PowerGen's pounds 2bn takeover bid
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Industrial Correspondent
PowerGen, one of the nation's major power generators, is in negotiations to bid for Midlands Electricity, one of the 12 regional electricity companies in England and Wales.
A bid for Midlands, which would be worth up to pounds 2bn, is expected to come within days. The City has been waiting for a fresh bid for a regional electricity firm since the Government's decision two weeks ago to give clearance to takeovers of South Western Electricity, Eastern Electricity and Manweb. A takeover by PowerGen would be politically controversial as it would recreate the integration of power generation, supply and distribution - a structure taken apart by the Government when the industry was privatised five years ago.
PowerGen is thought to have been encouraged by the decision of Ian Lang, President of the Board of Trade, not to refer to the Monopolies and Mergers Commission the proposed acquisition of Manweb by Scottish Power.
There had been a widespread view that the Scottish Power bid would be referred as it is the first within the industry. National Power, the largest generator, is also known to have been looking at potential takeover opportunities since Mr Lang signalled his free-for-all.
PowerGen declined to comment on the speculation that it was mounting a bid. But it is thought that the company will announce its offer along with plans to sell or lease some power generation plants in deals worth hundreds of millions of pounds.
Both National Power and PowerGen have been ordered to dispose of power stations by the industry regulator, Offer, in order to increase competition in electricity generation
Analysis, page 26
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