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Energis is currently part of National Grid, but the power company is cashing in a large part of its stake while telecoms stocks are riding high in the market.
National Grid, which operates the electricity generating system in England and Wales, says its stake is worth £1.2bn and that means Energis may be able to join the UK's top listed companies in the FTSE 100.
It was on Tuesday that National Grid said it would cut by one third its majority stake in high-flying telecoms group Energis.
The move is being interpreted as National Grid cashing in on investor hunger for telecoms shares, which have been booming in value.
Market delight at a long hoped-for deal has already propelled shares in the high-tech telecoms company, which supplies business customers via the grid's high voltage electricity pylons.
Energis shares were valued at 1712.5p before the markets opened on Friday, a rapid rise since their low of 254p last year.
Disconnection
The planned stake sale, in one tranche of exchangeable bonds and another in shares, will leave the grid with voting rights in Energis of less than 50%.
Earlier in the week, the National Grid's Chief Executive David Jones said the company had been lucky with market conditions, which have seen telecoms shares rise in value, but added that the deal had been driven by other factors.
Shares in Energis surged 8% on Monday as they were caught up in a wave of investor euphoria for European telecoms stocks, sparked by a $66.5bn merger of British cellphone market leader Vodafone Group with its U.S. counterpart, AirTouch.
"We said back in November we would be exiting from Energis over the next three to five years. We believe this is the right time to realise value and lock it in for our shareholders," Mr Jones said.
"We have been working on the deal for some time as the structure of exchangeable bonds is quite complicated," he added.
Enter the Footsie
Under the deal the grid, which currently owns 74% of Energis, will sell between 71m and 75m shares.
Prices for the bonds and shares will be set on 26 January.
Analysts said Energis would benefit from increased autonomy after the sale, and attract more value as a potential takeover target for predators.
The sale of National Grid's stake will change the ownership status of Energis and, at current values, allow it to join the FTSE 100 at the next review of the index on 10 March.
Energis is currently excluded because a FTSE 100 stock and one of its subsidiaries cannot both enjoy a place in the index.
Listed at just 290p per share in December 1997, Energis focuses on the booming advanced voice and data market, which accounts for 25% of the £6.9bn British business telecoms market.
Operating an advanced broadband network by wrapping over 5,000 kms of fibre optic cables around the earthwires between Britain's overhead power pylons, the group wants to become a leading alternative to British Telecommunications.
As a network operator, Energis carries around 40% of Britain's national Internet access traffic. Energis' customers include: the BBC, Boots, Demon Internet, ICL Pathway, Microsoft, Mirror Group Newspapers, National Grid and Virgin Atlantic Airways.
Grid buys US power firm
National Grid, which operates the electricity transmission network in England and Wales, is to buy a major US electricity businesses in a £1.9bn ($3.2bn) deal.
The US company, New England Electrical Systems, (NEES) is based in Massachusetts and serves 1.3m customers in the North East of the US.
National Grid has been keen to expand its interests outside the highly regulated power sector in the UK for some time.
The sale of its Energis stake will provide useful funds for any expansion plans.
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