Scottish Power surges on bid talk
Scottish Power shares jumped ahead today after takeover developments involving the utility took a new twist over the weekend.
The group’s share price rose by as much as 5% as speculation put Scottish & Southern Energy in the frame as a potential merger partner, while Powergen owner E.On is thought to have started formal takeover talks with Scottish Power.
Interest in the utility began in September when Germany’s E.On confirmed to the London stock market it was considering its options regarding a possible offer – a move which analysts said could be worth up to £12bn (€17.7bn).
An announcement on the latest developments could be made on Thursday when Scottish Power is due to report half-year results.
Shares in Scottish Power were up 4% at 580.5p by mid-morning leaving the stock close to the 587p seen on October 6, when the company stood at its highes level since the pring of 2001. It has a market value of almost £11bn (€16.3bn).
The emergence of a tie-up between SSE and Scottish Power – potentially creating a company worth £19bn (€28bn) – would alleviate political concerns in Scotland over one of the country’s biggest corporate names coming under foreign ownership.
But this too could have problems getting past energy regulators. Between them, Scottish Power and SSE account for about 70% of Scotland’s gas and electricity customers.
Scottish Power has been seen as vulnerable to a takeover since May, when it agreed to sell its US subsidiary Pacificorp for £2.9bn (€4.3bn) to MidAmerican, the energy business controlled by billionaire financier Warren Buffett.
It achieves more than half of its business outside its heartland north of the border and posted profits of more than £596m (€881m) last year.
SSE, which owns Southern Electric, Scottish Hydro Electric and Swalec, employs 10,000 people in the UK and claims to be Britain’s largest generator of energy from renewable sources.
E.On sells electricity and gas to around nine million customers in the UK through its Powergen brand.
The German company also owns the Central Networks distribution business, which combines Midlands Electricity and East Midlands Electricity, and brings power to 4.8 million customers across that region.
