Bidders line up in approaches for Midlands

PETER RODGERS

and MARY FAGAN

The takeover boom in the electricity industry stirred into life again yesterday for the first time since before Christmas when Midlands Electricity confirmed that it had been approached by potential bidders.

The shares rose 10p to 368p following a 14p rise on Monday. The earlier rise came after it emerged that Tractebel, the Belgian utility, was potentially interested in the company.

Other suitors thought to have knocked on Midlands' door include General Public Utilities, the New Jersey-based utility, and Houston Industries, which unsuccessfully tried to poach Norweb from North West Water last year.

A few weeks ago there was also a suggestion that Midlands would discuss a friendly merger with Southern Electric, the distribution company in the South of England. Southern, which is subject to a bid by National Power, has always made clear that it would welcome approaches from fellow regional firms. But Midland played down suggestions that a move was imminent and it is thought that any further announcement could be weeks away.

Midland said that although it had received approaches since the lapse of a pounds 1.95bn offer from PowerGen, "the board does not consider there is any immediate prospect of an offer being made for the company."

The PowerGen offer was referred to the Monopolies Commission by Ian Lang, President of the Board of Trade, and the report is not expected to be submitted to the Government before late March, followed by a period during which ministers will consider whether to act on any recommendations.

This long delay could give rival bidders a window of opportunity to challenge PowerGen, particularly those from abroad with few UK electricity interests whose offers would pose no serious competition problems. Previous foreign bids have been cleared by Mr Lang. PowerGen, along with National Power's bid for Southern, were both referred because the takeovers would result in a return to the vertically integrated structure that was dismantled at privatisation.

The approaches to Midlands are believed to have been from senior executives in interested suitor companies rather than from the merchant banks that are known to be scouring the country for the remaining electricity takeover business available.

Tractebel, the pounds 4bn Belgian company that owns two power plants in Northern Ireland, confirmed on Monday that it was exploring opportunities in the British power industry but said reports of any imminent move were "a bit too hasty".