E.on walks away from Scottish Power deal
On the face of it, E.on’s decision to walk away from bid talks with Scottish Power after it turned down their modest offer of 570p a share “looks curious”, says Simon Nixon on Breakingviews.com.
On the face of it, E.on's decision to walk away from bid talks with Scottish Power after it turned down their modest offer of 570p a share "looks curious", says Simon Nixon on Breakingviews.com.
The German utilities group could have upped its offer and still comfortably covered its cost of capital within three years.
But perhaps the deal wasn't as plain sailing as it first appeared. A key stumbling block seems to have been regulatory risk.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Any deal between the two firms was likely to come under close scrutiny from the EU's Competition Commission a worry that will have limited the premium a purchaser is be prepared to pay, says Patience Wheatcroft in The Times.
That leaves Scottish Power's CEO Ian Russell needing to convince shareholders that he can raise the share price above E.on's bid price, says the FT.
That's likely to be a tall order now that further bid speculation is absent; potential bidders, such as EDF and Scottish & Southern would be put off by similar regulatory concerns and Citigroup reckons that, to justify a valuation of 600p, the firm would need to find £139m of extra pre-tax profit in the year ending March 2007 surely "a stretch" too far.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
Nationwide Building Society launches £175 switching deal – who is eligible?
Nationwide Building Society has launched a new current account switching deal. We look at whether you are eligible, and how to get the free cash.
-
Barclays launches £500 cashback offer for ISAs - but there's a catch. Here's how it works
Barclays is looking to attract savers to its cash ISA range but you need a lot of money to get the full reward