Sparks fly in electricity deal
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November 30, 1998: 7:29 a.m. ET
EdF pays 'ridiculous' price for London Electricity, say analysts
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LONDON (CNNfn) - French electricity group Electricité de France has won the bidding war for London Electricity of the U.K., paying a price analysts described as "ridiculous".
State-owned EdF beat off a challenge from U.K. nuclear generator British Energy (BGY) to buy London Electricity for 1.9 billion pounds ($3.1 billion), including the assumption of 500 million pounds in debt.
London Electricity is owned by U.S. utility Entergy (ETR).
"This is a ridiculous price, it's worth half to two-thirds of that," said a London-based analyst who didn't wish to be named.
Iain Turner, utility analyst at BT Alex Brown agreed "it's a pretty stretchy price."
He pointed out that under such circumstances "there's no sin at all for British Energy in being outbid."
The top price Entergy has been able to extract is likely to bring forward further changes in the ownership of U.K. regional electricity companies.
Several of them have been acquired by U.S. groups and it's understood that some of the U.S. companies have been disappointed by their purchases.
Analysts speculation centered on Yorkshire Electricity - owned by AEP (AEP) and New Century Energies (NCE) - and Seeboard - owned by Central & South West Corp. (CSR).
AEP and CSR are planning to merge, leading analysts to speculate that at least one of their U.K. electricity holdings will be sold.
Some observers warned that prices such as the one paid for London Electricity might be harder to find in the future, because, as a state-owned company, "EdF doesn't work under normal commercial criteria," according to one analyst.
British Energy would not say how much it had offered for London.
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