Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education



Front Page

World

UK

UK Politics

Business

Sci/Tech

Health

Education

Sport

Entertainment

Talking Point

In Depth

On Air

Archive
Feedback
Low Graphics
Help

Wednesday, November 17, 1999 Published at 09:04 GMT


Business: The Company File

National Power splits in two

New strategy: long time coming but well-received

The UK-based electricity generating group, National Power, has ended months of speculation over its strategy by announcing a split of its international and domestic operations into separate companies.

The company says it is selling two power stations to rival companies for more than 1bn ($1.6bn) to take advantage of what it said were "attractive valuations" on offer.

The plan also involves the return of up to 600m ($970m) to shareholders.

The widely expected demerger by the troubled one-time flagship of privatised UK power generation will add to speculation that one or both of the demerged operations will fall victim to a predator in the consolidation frenzy gripping the industry worldwide.

Tough UK market

Earlier this year, National Power lost investor confidence as its strategy for dealing with tightly squeezed domestic earnings appeared to falter.

A strategy review was announced following the resignation of its chief executive, Graham Henry, in February, and is the result of investor pressure to realise shareholder value.

The chairman, Sir John Collins, said: "The board considers that the proposed demerger represents the best way forward for the company and for our shareholders.

"The UK and international operations have different characteristics and are increasingly running independently of each other. It is now the right time for them to be established as highly focused individual entities."

Dividend

Demonstrating the difficulties it has faced raising international earnings to match the squeeze on its regulated domestic business, the group fulfilled last year's commitment to cut its dividend.

It recommended a year to March 2000 pay-out of 15 pence, down from 19p a year ago.

The demerger, capital return and dividend cut were widely predicted by analysts, but the two power station sales were being seen as a surprise.

The markets reacted favourably to the plan, with National Power's shares rising strongly in early trading.

National Power will sell its gas fired power station at Killingholme, North Lincolnshire, and its coal-fired station in Eggborough, North Yorkshire.

The Killingholme station is being bought by US-based NRG Energy for 410m and the Eggborough station by British Energy for 640m.



Advanced options | Search tips




Back to top | BBC News Home | BBC Homepage |


The Company File Contents

Internet Links


National Power


The BBC is not responsible for the content of external internet sites.




In this section

Microsoft trial mediator welcomed

Vodafone takeover battle heats up

Christmas turkey strike vote

NatWest bid timetable frozen

France faces EU action over electricity

Pace enters US cable heartland

Mannesmann fights back

Storehouse splits up Mothercare and Bhs

The rapid rise of Vodafone

The hidden shopping bills

Europe's top net stock

Safeway faces cash demand probe

Mitchell intervenes to help shipyard

New factory creates 500 jobs

Drugs company announces 300 jobs

BT speeds internet access

ICL creates 1,000 UK jobs

National Power splits in two

NTT to slash workforce

Scoot links up with Vivendi

New freedom for Post Office

Insolvent firms to get breathing space

Airtours profits jump 12%

Freeserve shares surge

LVMH buys UK auction house

Rover - a car firm's troubles