LOS ANGELES, Feb 11: Nomura International Plc withdrew from the battle for Britain's Energy Group Plc, leaving Texas Utilities Co as the only remaining threat to PacifiCorp's bid. Texas Utilities and Nomura emerged last month as potential rival bidders, but PacifiCorp's offer last week to purchase the British electricity and coal company for $6.6 billion proved too rich for the unit of Japan's Nomura Securities Co Ltd.Nomura said in a statement that the anticipated return on capital did not justify a higher price.
Nomura, which already owns a string of real estate businesses and pub chains in Britain, had planned to spin off Energy Group's coal and power marketing operations, but said talks with a third party were disappointing.
The securities firm was also expected to face a tough review from British regulators.
PacifiCorp, whose initial bid last June lapsed after British authorities decided to review it, raised its offer by about 11 per cent, reflecting big gains in the stock prices of Britishelectric utilities and talk of rival bids.
Under the latest deal, PacifiCorp would also assume $4.1billion in Energy Group debt, bringing the value of the transaction to $10.7 billion.
The Dallas-based firm released a statement on Tuesday affirming it was still in talks with Energy Group "which may or may not lead to an offer being made."
The main issue for state regulators is whether acquisition of the London-based energy conglomerate would result in more than 30 per cent of Texas Utilities' net worth being held in foreign countries. Energy Group was formed about a year ago from the spin-off of Hanson Plc energy assets including British electricity distribution operation Eastern Electricity and Peabody Coal Co, which is based in the United States.
"Should we decide to bid for Energy Group the Public Utility Commission needs to determine the deal would not be detrimental to Texas ratepayers," Jim Lawrence, a spokesman for Texas Utilities said.
The utility went through a similar review for its 1995purchase of an Australian utility, David Anderson, head of investor relations at Texas Utilities noted.
A spokesman for PacifiCorp said the company's bid was posted on Friday and "the clock has started ticking."
"PacifiCorp welcomes the announcement by Nomura that it is no longer in discussions with Energy Group regarding a possible offer," the spokesman said.
"PacifiCorp believes its ... cash offer for Energy Group represents excellent value and certainty for Energy Group shareholders."
Texas Utilities said any offer it made would have to compare favourably with PacifiCorp's renewed offer which expires on March 9, unless extended.
Even if Texas regulators determine a merger of Texas Utilities and the Energy Group would exceed the 30-per cent foreign-holding threshold, the three-member commission does have leeway to approve the transaction anyway, a spokeswoman at the commission noted.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
