ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, November 8, 1996 TAG: 9611080054
SECTION: BUSINESS PAGE: A12 EDITION: METRO
DATELINE: LONDON
SOURCE: BLOOMBERG BUSINESS NEWS
East Midlands Electricity PLC said Thursday it will reject a bid from Dominion Resources Inc. if the Virginia power company doesn't offer more than the 1.2 billion pounds ($2 billion) it says it may bid.
East Midlands' shares slipped 4 percent. Investors were concerned because Dominion hasn't made a firm bid for the company and that if a bid were referred to U.K. antitrust authorities, it could be delayed for months during the politically sensitive U.K. pre-election period.
``The market wants Dominion either to put up or shut up,'' said Nigel Hawkins, an analyst at Yamaichi International. ``And there is concern about a Monopolies and Mergers Commission referral.''
Dominion Resources said Wednesday it's considering an offer for the U.K. electricity supply company, just after another U.S. power company, CalEnergy Co., made a 759 million-pound bid for Northern Electric PLC.
The acquisition would get Dominion into a comparatively deregulated U.K. market and help it prepare to face domestic competition when the U.S. market opens so that customers are free to purchase power from competing suppliers.
It also fits with Dominion's plan to expand beyond the area served by its largest unit, Richmond-based Virginia Power, said analysts.
In Western Virginia the company sells electricity in portions of Alleghany, Bath, Bedford, Botetourt and Rockbridge counties.
``We wait to see if Dominion Resources is prepared to make an offer and if so at what level,'' said East Midlands' Chairman Sir Nigel Rudd. He said that at the proposed price, the company's advice to shareholders would be to reject such an offer.
Analysts agreed. ``Its way too low. If one compares it to Northern, it's way below - and East Midlands has a stronger balance sheet.'' said Michael Cohen at Salomon Brothers.
LENGTH: Short : 42 linesby CNB