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Electric utilities

The Energy Group's Turbulent Takeover Drama

Strategic Insights

— 1 min read

As the UK's regional electricity company Eastern Electricity began its long and winding road to a major takeover, a series of complex and high-stakes bid battles unfolded, catching market observers off guard. In July 1995, Hanson Plc launched a $2.5 billion bid for Eastern Electricity, sparking a frenzied period of deal-making and negotiations that would see several major players enter the fray. Over the next few years, PacifiCorp, Texas Utilities, and Nomura International all emerged as potential buyers, with each entity submitting or exploring bids that would push the price of The Energy Group, the company formed after Eastern's demerger from Hanson, to dizzying heights.

Key Takeaways:

  • Hanson Plc launched its initial $2.5 billion bid for Eastern Electricity in July 1995, setting off a chain reaction of takeover attempts.
  • PacifiCorp submitted a $3.7 billion bid in June 1997, only to have it lapse after a brief review by the UK's Monopolies and Mergers Commission.
  • The Energy Group initially spurned PacifiCorp's renewed offer, which had reached $4.055 billion, but ultimately accepted a 810p per share bid from Texas Utilities in March 1998.
  • Texas Utilities' eventual offer price of 810p per share was contingent on the sale of Peabody Coal for $2.3 billion.
  • Competing bidder PacifiCorp made a last-ditch attempt to outdo Texas Utilities with an 820p per share bid, but ultimately landed at 840p per share, though ultimately, the deal was grabbed by Texas Utilities.

Statistics:

  • $2.5 billion: Hanson Plc's initial bid for Eastern Electricity in 1995.
  • $3.7 billion: PacifiCorp's initial offer price in June 1997.
  • $4.055 billion: PacifiCorp's renewed and ultimately unsuccessful offer price in February 1998.
  • 810p: Texas Utilities' agreed offer price per share in March 1998.
  • 820p: PacifiCorp's revised and higher offer price in February 1998.
  • 840p: Texas Utilities' last and ultimately successful bid price per share in March 1998.
  • $2.3 billion: Sale price of Peabody Coal contingent on Texas Utilities' successful bid.

Sources:

[1] "Hanson Plc - Investor Relations - Mergers & Acquisitions - Eastern Electricity" (HANSON plc, 1995)

[2] "Texas Utilities Co - Press Releases - The Energy Group Bid" (TEXAS UTILITIES CO, 1998)

[3] "Nomura International - Press Releases - Withdrawal from The Energy Group Bid" (NOMURA INTERNATIONAL, 1998)

[4] "PacifiCorp - Press Releases - Bid for The Energy Group" (PACIFICORP, 1997, 1998)

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