Friday, September 09, 2005
ScottishPower: SSE could enter fray with financial partner, industry sources say
Scottish Power (SP), the UK utility that was this week the subject of public takeover interest from E.On AG, could see a rival bid interest from Scottish and Southern Energy (SSE), backed by a financial partner, according to industry participants.
Several industry sources suggested that Scottish and Southern Energy (SSE) could be in the early stages of considering a bid for ScottishPower with a financial partner. SSE has been linked previously with a possible bid for ScottishPower, and the group even took preliminary steps towards a bid around three years ago. However, it has not been previously suggested that the group would launch a bid with an external financial partner. An SSE spokesperson said that the group had no comment on any aspect of the situation.
One industry source described SSE as one of the “better run companies” in the UK power sector, noting that Chief Executive Ian Marchant was very well-regarded within the industry. The source added that the group could potentially bring more to a combination with Scottish Power than E.On, and also have less regulatory difficulties with the transaction.
The person also noted that an SSE/SP link-up did not have many of the competition disadvantages of an E.On/ Scottish Power combination. The person said that the latter could have “too much generation pricing power” to get the transaction approved, and that such a merger would alomost certainly lead to a reference to the Competition Commission and may lead to mandated disposals.
A second industry source said that were SSE to bid solely for ScottishPower it would likely have to go to the debt markets to finance the transaction. The source indicated that the presence of a financial partner could facilitate an SSE bid without recourse to further debt.
One of the sources also said that there did not appear to be any other companies particularly interested in bidding for ScottishPower besides SSE.
Meanwhile, speculation continued as to the motivation for the timing of E.On’s statement to the markets regarding its interest in ScottishPower. Two of the sources noted a report about the situation in the weekend press, and said that E.On had likely come under very strong pressure from the Takeover Panel to disclose its hand, following a further ramp-up in the ScottishPower share price last week. However, a third UK power market source said that E.On’s decision to go public at this time (especially with an all-cash offer) could also serve as a way of scaring off others from entering the fray.
It was also unclear if E.On had intentionally leaked news of its potential bid and the appointment of investment bank Lazard as financial advisor for the situation, and so precipitated Takeover Panel pressure. However, one source noted that E.On could now be constrained in its potential bid for ScottishPower, as its intentions had been revealed and the element of surprise was lost from its approach.
A spokesperson for the Takeover Panel said that it was organisation policy to never comment on specific situations. ScottishPower has a market capitalisation of around GBP 10.3bn.
Source: mergermarket
Value: £10,300m (ScottishPower market cap)
Several industry sources suggested that Scottish and Southern Energy (SSE) could be in the early stages of considering a bid for ScottishPower with a financial partner. SSE has been linked previously with a possible bid for ScottishPower, and the group even took preliminary steps towards a bid around three years ago. However, it has not been previously suggested that the group would launch a bid with an external financial partner. An SSE spokesperson said that the group had no comment on any aspect of the situation.
One industry source described SSE as one of the “better run companies” in the UK power sector, noting that Chief Executive Ian Marchant was very well-regarded within the industry. The source added that the group could potentially bring more to a combination with Scottish Power than E.On, and also have less regulatory difficulties with the transaction.
The person also noted that an SSE/SP link-up did not have many of the competition disadvantages of an E.On/ Scottish Power combination. The person said that the latter could have “too much generation pricing power” to get the transaction approved, and that such a merger would alomost certainly lead to a reference to the Competition Commission and may lead to mandated disposals.
A second industry source said that were SSE to bid solely for ScottishPower it would likely have to go to the debt markets to finance the transaction. The source indicated that the presence of a financial partner could facilitate an SSE bid without recourse to further debt.
One of the sources also said that there did not appear to be any other companies particularly interested in bidding for ScottishPower besides SSE.
Meanwhile, speculation continued as to the motivation for the timing of E.On’s statement to the markets regarding its interest in ScottishPower. Two of the sources noted a report about the situation in the weekend press, and said that E.On had likely come under very strong pressure from the Takeover Panel to disclose its hand, following a further ramp-up in the ScottishPower share price last week. However, a third UK power market source said that E.On’s decision to go public at this time (especially with an all-cash offer) could also serve as a way of scaring off others from entering the fray.
It was also unclear if E.On had intentionally leaked news of its potential bid and the appointment of investment bank Lazard as financial advisor for the situation, and so precipitated Takeover Panel pressure. However, one source noted that E.On could now be constrained in its potential bid for ScottishPower, as its intentions had been revealed and the element of surprise was lost from its approach.
A spokesperson for the Takeover Panel said that it was organisation policy to never comment on specific situations. ScottishPower has a market capitalisation of around GBP 10.3bn.
Source: mergermarket
Value: £10,300m (ScottishPower market cap)
