US utilities to bid for Midlands Electricity
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Midlands Electricity is expected to agree to a takeover next week from two US utilities valuing the business at pounds 1.5bn to pounds 2bn and setting the scene for a fresh round of bid fever in the power industry.
The company confirmed yesterday that it was in discussions that could lead to an offer. One of the bidders is the New Jersey-based General Public Utilities. The other is rumoured to be Houston Industries of Texas, which bid unsuccessfully for Norweb last year.
The market has been expecting a bid since the Trade and Industry Secretary Ian Lang blocked an agreed pounds 1.95bn takeover of Midlands by the generator PowerGen 10 days ago. Within 48 hours the Midlands chairman Bryan Townsend had received a number of informal approaches from US utilities.
Other possible US suitors being mentioned yesterday included Pacificorp, Mission Energy, Duke Power and Florida Power and Light. There were also rumours of a possible counter bid by the water company Severn Trent.
Although Mr Lang has effectively blocked bids both by and for the two generators, National Power and PowerGen, the remaining independent regional electricity companies are all thought vulnerable to takeover.
General Public Utilities is capitalised at $3.8bn (pounds 2.5bn) and owns three utility companies on the US eastern-seaboard - Jersey Central Power and Light, Metropolitan Edison and Pennsylvania Electric. It has a turnover of just under $4bn and 10,000 employees.
Houston Industries is valued at $5.5bn and generates and supplies electricity to more than 1.5 million customers on the Gulf coast of Texas, making it the ninth largest electricity utility in the US. It also has international operations in Argentina and India.
Analysts speculated yesterday that a bid could value Midlands at up to 450p a share or more compared with its opening price yesterday of 385p. The shares closed 38p higher at 423p valuing the company at pounds 1.6bn.
PowerGen's attitude could be crucial to the outcome since it is sitting on a 21 per cent stake.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments