The rivalry between PacifiCorp and Texas Utilities for TheEnergy Group may come to a head this week or next as the Britishcompany is expected to choose a bid to recommend to shareholders.

While the offer from Energy Group’s original suitor, PacifiCorp,is lower than the Texas Utilities’ (TU) bid, TU’s efforts may bethwarted by British regulators should they decide on a full-scalereview of the TU offer. A previous review of PacifiCorp’s offertook six months to resolve, but Britain’s Mergers and MonopoliesCommission finally approved the deal.

Last week, TU raised its offer to 840 pence/share. TU had agreedto acquire Energy group at 810 pence/share, but the bid wassurpassed by an 820 pence/share offer from PacifiCorp, which heldto that number while TU upped its bid to 840 pence/share. ThePacifiCorp bid is expected to stand at least until Britishregulators decide whether to review the TU offer. Last week TU saidit had just less than 15% of Energy Group outstanding shares. PacifiCorp had acquired 8.8%.

One possible resolution to the contest, speculators said, wouldbe for PacifiCorp to acquire only Energy Group’s U.S. Peabody Coalunit with TU acquiring the rest of the company. TU’s offer toPacifiCorp specifies Peabody would be sold for $2.3 billion toLehman Brothers, which then may take the coal company public.

The bidding war has raised Energy Group’s stock price nearly 50%since June. One analyst predicted a price as high as 850 to 860pence/share would still be workable for either PacifiCorp or TU.

Also last week, Soros Fund Management, controlled bybillionaire financier George Soros, said it sold 6.59 millionEnergy Group shares at 8.40 pounds each and its American DepositaryReceipts at $55.125 each.

The Energy Group was formed a year ago when British conglomerateHanson spun off its energy assets, including regional Britishelectric utility Eastern Electricity, and Peabody Coal, the largestU.S. coal producer.

Joe Fisher, Houston

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