Investors yesterday piled another £224m on to the stock market worth of Scottish & Southern Energy after the Perth-based utility again became a possible takeover target as German power giant E.ON abandoned its battle to wrest control of Spain's Endesa.
This latest flurry of speculation comes just six weeks after SSE was touted as a likely target for the new-broom chief executive of German utility RWE. Russian gas company Gazprom has also been linked recently to a bid for SSE.
At the same time, the frenzy of merger and acquisition rumours in the City yesterday also had brewer Scottish & Newcastle as a bid target of Diageo.
Nonetheless, the latest SSE talk follows the £11.6bn acquisition of ScottishPower by Spanish electricity group Iberdrola, which leaves SSE as one of the last few UK-owned energy companies.
Asked yesterday to what extent SSE was determined to preserve its independence, a spokeswoman for the company said: "We don't comment on speculation. Nice to talk to you. Bye."
ScottishPower shareholders just at the end of last week delivered a ringing endorsement of their board's proposal to put the future in the hands of Iberdrola.
The Spanish bid that ended up sealing the deal was 42% higher than the offer from E.ON, whose bid was rejected in 2005.
Shares in SSE yesterday surged as much as 4% in early trading, but edged back later in the session to close up 1.5%, or 24p, at 1582p, valuing the company at £13.7bn.
Powergen owner E.ON last night would not rule out possible takeovers in the UK now that the Endesa deal was off, but the German giant declined to comment on a bid for SSE.
Other utilities jumped during the day, including Centrica, British Gas and International Power on bid speculation. Shares in European utilities also rocketed yesterday.
One City trader yesterday said: "They are up on speculation that E.ON will now look at UK utilities."
Received wisdom before the Spanish takeover of Glasgow-based ScottishPower was that SSE was better protected from predators because its shares had outperformed significantly those of its southern rival since the companies were floated on the stock market at 240p-a-share in 1991.
This view has altered as bid action and speculation in the European energy sector has reached fever pitch, with the perception now that SSE would be a chunky but manageable deal for one of the major Continental players.
Evolution Securities analyst Angelos Anastasiou said SSE would be a "good fit" for E.ON and added: "There is a bit of a perception that E.ON might come looking for something else, but it would have to pay a high price for it."
He also said: "SSE is regarded as a well-run business, and a bidder would have to convince the existing shareholders that they would need to sell it. There could also be regulatory issues with a bid."
E.ON abandoned its £29bn bid to gain control of Endesa on Monday night after it reached a deal with rivals Acciona and Enel, which had both built up stakes in the company.
The company abandoned the deal because of the likelihood of "unpredictable lawsuits", but has agreed to buy power assets in Spain, Italy and France worth some £16.8bn from Acciona and Enel if the duo gains control of Endesa.
SSE, which boasted 7.7 million energy-supply related customers last month, posted underlying pre-tax profits of £455.4m in the six months to September last year, up 35% on the previous period.
The company also owns Southern Electric, Scottish Hydro Electric and Swalec in Wales.
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