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. Last Updated: 07/27/2016

CalEnergy Eyes U.K. Power Firm

LONDON -- Expanding U.S. power group CalEnergy swooped on Northern Electric, one of Britain's regional electricity companies, on Friday with a ?650 million, or $1.04 billion, offer to ordinary shareholders.


CE Energy U.K., majority-owned by CalEnergy, is offering 630 pence cash per ordinary share compared with Northern Electric's closing share price on Friday of 520 pence.


Shares in Northern, which only last year managed to fend off a hostile bid from Trafalgar House, surged by more than a pound to touch the bid price of 630 pence, before easing back to 617.


"Northern Electric meets all our criteria for the further development of our business," said CalEnergy's chairman and chief executive David Sokol in a statement announcing the offer. "I believe that our offer represents a unique opportunity for shareholders, employees and customers."


CalEnergy has a 70 percent stake in CE Electric U.K., which is making the offer. U.S.-based construction, mining and telecommunications group Peter Kiewit owns the rest.


Sokol heads a company which, since his appointment in 1991 has seen its market capitalization grow from $200 million to $1.9 billion and which has recently begun expanding overseas.


Its core operations are, however, centered in California, New York and Texas and the bid for Northern Electric is a significant move outside of the domestic U.S. market.


Analysts said the bid showed that political uncertainty due to the pending general election has failed to deter predators for British power utilities.


"This underlines the fact that would-be acquirers are much less concerned about the political situation than the stock market is," said Arthur Hepher at Credit Lyonnais Laing.


David Campbell at broker Greig Middleton said he would not be surprised if the bid for Northern was followed by offers for East Midlands Electricity and Yorkshire Electricity.