Texas Firms’ Offer for British Utility Sparks Bidding War

Two Texas utilities made a friendly $2.7-billion takeover bid for Britain’s Norweb on Thursday, but a British water company promptly raised its hostile offer as a bidding war erupted for the electric company.

Norweb said it will recommend that shareholders accept the offer by Houston Industries Inc. and Central & South West Corp.

Their bid was the latest sign of the merger frenzy sweeping the utility industries on both sides of the Atlantic.

The latest bids for Norweb come just a month after British utility South Western Electricity accepted a $1.8-billion offer from Atlanta’s Southern Co.

U.S. utilities, faced with slow domestic growth and increased competition as the government peels away regulations governing the industry, have been attracted to Britain’s cash-rich regional utilities. The British industry was partially deregulated in 1990.

Experts said Norweb is attractive because it has low costs and a reputation for strong customer service.

Just hours after the U.S. companies announced their offer, North West Water said it was raising its offer to $2.72 billion from $2.5 billion.

Executives at Houston Industries and Central & South West indicated that their bid of $16.68 a share is not final, signaling a bidding war.

Houston Industries, the ninth-largest electric utility in the United States, generates, transmits and distributes power on the Texas Gulf Coast. Dallas-based CSW owns four electric utility subsidiaries.