German utility E.ON targets Scottish Power |
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Published
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Tue, 25 Oct 2005 06:05
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LONDON: International energy company Scottish Power Plc is a possible acquisition target for German power company E.ON AG. It is understood that two of Scottish Power's largest shareholders are ready to sell their stake for a low price of even 600 pence a share offered by the German Utility.
E.ON, which has already bought several British utilities, including Powergen, admitted it is considering a buy-out of Scottish Power. However, the British company has not reacted and people in the know say its board is unlikely to accept the low offer.
However, one of the shareholders who is said to be considering the offer from E.ON thinks the offer is reasonable. A lower offer may force Scottish Power to examine whether a merger with British rival Scottish & Southern Energy is feasible or not. Another shareholder too has expressed readiness for the 600-pence offer.
At this price, the company is valued at 11.29 billion pounds.
Analysts believe Scottish & Southern Energy may face a problem in funding in case it is to acquire the rival. E.ON has stated that it is going in for an all-cash deal. There will also be uncertainties related to competition law, which is very ambiguous in Scotland.
Scottish Power had become an acquisition target after its chief executive Ian Russel had made a surprise announcement that the company's U.S. subsidiary Pacificorp is being sold to U.S. investor Warren Buffet. Russel had at one time categorically said Pacificorp is central to the company's international strategy and it would not be sold.
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