Hanson to Buy British Utility for $4 Billion

British-American conglomerate Hanson agreed Monday to buy Britain’s biggest regional electric company for $4 billion, the third takeover bid in as many weeks in the British utility industry.

If it goes through, the all-cash offer for Eastern Group will be Hanson’s first major acquisition since its $2.3-billion takeover of Quantum Chemical of the United States in 1993.

The bid, agreed to by the boards of both companies, raises the stakes for would-be acquisitors scrambling to buy British power companies, industry analysts said.

Britain’s 12 regional electric companies were sold off by the government in late 1990. They have attracted bids lately because of their strong balance sheets and steady income from electricity distribution, analysts said.

Two other developments have fueled the takeover bidding. First, an industry regulator set new price curbs for the 12 companies on July 6, removing uncertainty created after he had said in March that he wanted to review price controls set in August, 1993. Second, regional utilities own stakes in a power-distribution network known as the National Grid, which the government is scheduled to sell off later this year. The sale is expected to greatly boost the grid’s value.

The acquisition would give Hanson another major business. Its already diverse holdings include Peabody Coal and Grove Cranes in the United States, and Imperial Tobacco and London Brick in Britain.

The move is the latest in a series of asset shuffles for Hanson, which recently agreed to spin off its U.S. consumer businesses into a holding company called U.S. Industries Inc.

Hanson’s U.S. shares, traded on the New York Stock Exchange, slipped 50 cents to $17.25 on Monday.