Texas Utilities last week said it approached Britain’s The Energy Group with “possible interest in the company” in competition with PacifiCorp, which made a failed tender offer to acquire the company back in June. Discussions between Texas Utilities and Energy Group “are at a preliminary stage and may or may not lead to an offer being made for the company,” Texas Utilities said.

The announcement followed reports the company was among a number of new prospective bidders for Energy Group. For its part, Energy Group confirmed it has been approached by other parties. Nomura International, the London unit of Japan’s Nomura Securities Co., said it was in talks with The Energy Group that might lead to an offer for the UK power company, which owns the United States’ largest coal producer.

The three-way bidding war follows the lapse of PacifiCorp’s June offer, which was held up when the deal was referred to England’s Monopolies and Mergers Commission Aug. 1. The deal was subsequently cleared Dec. 19. But approvals still are required from the U.S. Federal Trade Commission. PacifiCorp is expected to raise its $6 billion offer when it renews its bid.

PacifiCorp said last week in its 1997 earnings release it has incurred about $60 million of costs related to the Energy Group deal for bank fees, legal expenses and other costs. “These costs have been deferred because the company expects to make a new bid for [Energy Group].” If the new bid is unsuccessful, PacifiCorp said it will write off the deferred costs of about $38 million after tax, or $0.10 per share. In Q3 1997, PacifiCorp recorded an after-tax loss of $65 million, $0.22/share, from the closing of foreign exchange positions related to its offer for Energy Group. Foreign exchange positions were bought to hedge risk of exchange rate fluctuations related to the Energy Group offer. PacifiCorp reported earnings on common stock of $451 million in 1997, down from $475 million in 1996.

Joe Fisher, Houston

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