TXU to buy UK energy provider

Friday, August 4th 2000, 12:00 am
By: News On 6

TXU Corp. of Dallas has agreed to buy Norweb Energi from United Utilities PLC for $726 million to widen its customer base for electricity in the United Kingdom.

The purchase builds on TXU's $10.4 billion acquisition of Eastern Group in 1998. The Texas-based company bought a majority of a German municipal utility last month and holds a 19 percent stake in Spain's fourth-largest power company. It has said it may sell shares in its European units in the future.

"Anyone in this game will need a solid customer base to succeed," said Andrew Page, an analyst at Robert Fleming Securities.

The Norweb acquisition increases TXU's customer base to around 5.6 million in the United Kingdom. Some analysts see 5 million customers as the optimum number for companies with both generation and supply interests, as it allows them to more easily balance their power output with customer demand.

Norweb, which was put up for sale in March, is a Manchester-based retail electricity supply business serving 2.3 million customers in northwest England.

Government-mandated price cuts drove United Utilities to focus on its nonregulated businesses and to increase revenue through its telecommunications operator and customer services units.

Norweb's contracts will be absorbed into TXU's European power contract portfolio, TXU Europe chief executive Phil Turberville said.

In other news, Spain's stock market regulator said it will start legal action against TXU and Electrabel SA for an alleged plot to jointly purchase 15.3 percent of Hidroeléctrica del Cantábrico SA, Spain's fourth-biggest power company. The National Stock Market Commission suspended the voting rights of TXU and Belgium's biggest power company in Cantabrico.

TXU shares rose 58 cents Thursday to close at $33.14.