PUC Says Hostile SDG&E; Bid Would Need Hearing
SCEcorp would need approval from state regulators before attempting a hostile takeover of San Diego Gas & Electric Co., according to Michael Day, deputy general counsel for the state Public Utilities Commission.
Day’s comment Friday came a day after SDG&E;'s board of directors unanimously rejected SCE’s $2.16-billion stock swap merger bid for SDG&E.; Despite that rejection, SCE has indicated that its offer will stay alive “indefinitely.”
Utility industry analysts have predicted that SCE, which has excess electrical generating capacity, will continue its efforts to snare SDG&E;, which buys half of its electrical power from other utilities.
SCE Chairman Howard Allen, who was unavailable for comment Friday, has repeatedly declined to discuss whether the Rosemead-based parent company of Southern California Edison will pursue SDG&E; through a hostile stock tender offer now that the San Diego utility has spurned its friendly merger offer.
Although any hostile takeover attempt by SCE would probably involve complicated questions of strategy and timing, a “very straightforward” set of regulations prohibits SCE from acquiring SDG&E; without first gaining the PUC’s approval, Day said Friday.
The PUC regulation prohibits “the sale, merger or consolidation of a regulated utility . . . without authorization from the commission,” according to Day.
“Consequently, a utility can’t acquire or merge with another regulated utility without authorization from the commission,” he said. “Any such attempt to take over another utility without our permission would be void.”
Regulatory approval would be required for a friendly or an unfriendly takeover, Day said. The PUC also has the option of halting a hostile takeover attempt by prohibiting one utility from acquiring additional stock in another utility.
The PUC also would hold “extensive public hearings” on whether a hostile bid would be in the public interest, according to Day.
“Everybody involved--shareholders, ratepayers, consumer groups and utility managers--would get a chance to duke it out,” he said. “It would be one hell of a hearing, as far as we’re concerned.”