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SCE Boosts Bid in SDG&E; Offer

Times Staff Writer

SCEcorp, the parent company of Southern California Edison Co., on Wednesday raised the value of its stock swap merger bid for San Diego Gas & Electric to $2.16 billion from $2.12 billion, according to spokesmen at both utilities.

SCEcorp has demanded a response from SDG&E;'s board of directors by the close of business today. SDG&E; spokesmen Dave Smith declined Wednesday to confirm SCEcorp’s claim that the San Diego utility’s board of directors will meet this morning to vote on SCEcorp’s merger offer.

The Rosemead-based holding company’s latest bid represents a "$1-billion premium over book value” for SDG&E; shareholders, according to SCEcorp Chairman Howard Allen. “The new exchange ratio represents a price of 186% of book value.

SDG&E;'s board “can rest assured that it has extracted from us the highest price we are willing to pay,” Allen wrote in a letter delivered Wednesday to SDG&E; Chairman Thomas Page.

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The newest exchange ratio represented a 50% increase over the 1.15 share exchange ratio first offered by SCEcorp on July 26, according to Allen. The latest offer would boost earnings for SDG&E; shareholders by 23% during 1988 should the merger be completed, Allen said.

‘Best and Final Offer’

Allen’s letter also suggested that SCEcorp has opted against making a hostile bid or a tender offer for SDG&E.; The offer made Wednesday was “our best and final offer for San Diego Gas & Electric,” Allen wrote.

Allen’s statement “should be taken at face value,” SCEcorp spokesman Lewis Phelps said Wednesday. “This is our best and final offer.”

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SCEcorp on Wednesday distributed copies of Allen’s letter, which was delivered after the market closed, to reporters. SDG&E; stock closed up $.125 at $35.50.

SDG&E;'s board will study the most recent offer, according to Smith, who declined further comment on SCEcorp’s merger proposal.

In his letter to Page, Allen hinted that SDG&E; has sought modifications in its previously signed merger agreement with Tucson Electric Power. However, SDG&E; spokesman Dave Kusumoto declined to describe progress on negotiations between SDG&E; and TEP.

SCEcorp predicated its merger on SDG&E; abandoning its previously announced merger agreement with TEP. According to the terms of that agreement, SDG&E; would have to pay $25 million to TEP should the merger not take place.

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SCEcorp had “hoped to engage in negotiations . . . (with SDG&E; but) your board has chosen not to negotiate with us prior to making its decision,” said the letter Allen sent to Page.


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