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News > International
$7.8B Scottish Power play
December 7, 1998: 4:22 a.m. ET

The UK's biggest utility buys PacifiCorp of the US in all-stock deal
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NEW YORK (CNNfn) - U.K. utility ScottishPower announced early Monday it is buying PacifiCorp, a major provider of electricity in the Pacific Northwest. The deal, which values PacifiCorp at 4.7 billion pounds ($7.8 billion), is the first takeover of a major U.S. electricity company by an overseas company.
     Under the terms of the all-paper deal, ScottishPower (SPW) will exchange 0.58 percent of its American depositary receipts for each share of PacifiCorp (PPW).
     Based on a share price of 650p, the ScottishPower share price used in the negotiations, the price per PacifiCorp share was $25.12.
     In London Friday, ScottishPower closed 675 pence. ScottishPower's ADRs rose $1.125 to $44.625 in New York on Friday, while PacifiCorp shares rose $1.31 to $20.75. They recently hit a 12-month low of 18-3/4..
     Prior to completion, ScottishPower plans to buy back up to 500 million pounds of its own shares to reach an "efficient capital structure" for the combined group.
     ScottishPower will retain its Glasgow headquarters and retain its primary listing in London.
     PacifiCorp's earnings have slid in recent years, due in part to the costs of its failed takeover efforts and volatile power prices, which hurt its energy trading business.
     Analysts said that without knowing more about the underlying reasons for that decline, it was hard to tell whether the deal would be good for ScottishPower's shareholders.
     "While in the short-term it sounds sensible in terms of going into the U.S. and so on, there must be some serious concerns about PacifiCorp," said Williams de Broe utilities analyst Nigel Hawkins.
     "Their earnings-per-share for the first nine months were pretty poor and that is partly reflected in the share price and the valuation. On the other hand, how long will it take ScottishPower to turn that around and how deep are the problems?"
     But Murray Stuart, Chairman of ScottishPower and chair of the new company, was upbeat. "PacifiCorp will ... provide a strong platform for growth in the US complementing our existing opportunities in the UK," he said.
     Ian Robinson, ScottishPower chief executive, will become chief executive of the merged company and senior PacifiCorp directors will join the board.
     ScottishPower, based in Glasgow, supplies electricity to about five million homes in England, Wales and Scotland. It also has operations in telecommunications, water and waste services.
     PacifiCorp has 1.4 million customers in the Pacific Northwest. Its subsidiaries, Pacific Power and Light and Utah Power and Light, operate in nine Western states.
     The deal is a reversal of PacifiCorp's own failed plans to buy a British-based power company. In April, the company backed out of a long-running battle with Texas Utilities Co. (TXU) for control of British power company Energy Group.
     Texas Utilities subsequently agreed to pay $7.4 billion to acquire Energy Group. Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.