PORTLAND, Ore. -- ScottishPower PLC, the United Kingdom's biggest utility, agreed yesterday to buy PacifiCorp for about $11.8 billion in stock and assumed debt in what would be the first foreign acquisition of a large U.S. power utility.
ScottishPower agreed to pay about $25.13 a share in stock for each PacifiCorp share, a 21 percent premium to Friday's closing price of $20.75. PacifiCorp, the largest utility in the Pacific Northwest, has $4.9 billion in long-term debt.
Its shareholders are to receive American depositary receipts valued at 2.32 London shares of Scottish Power for each PacifiCorp share.
Portland, Ore.-based PacifiCorp would give Scottish Power 1.4 million U.S. customers, a network of transmission lines and low-cost power from coal-fired plants to sell as states in the western United States open electricity sales to competition. The acquisition is expected to face close scrutiny, especially from regulators in the six states where PacifiCorp now owns utilities.
"I'd be very surprised if they get the approvals they need," said BT Alex. Brown & Sons Inc. analyst Edward Tirello.
"They have way underestimated the whole state regulatory process."
Shares of ScottishPower fell 66 pence to 609p in London trading. ScottishPower's ADRs fell $3.75, to $40.875, in New York. Shares of PacifiCorp fell 18.75 cents, to $20.5625.
PacifiCorp has utilities in Oregon, Washington, Utah, Wyoming, Idaho and California, all of which could delay or possibly prevent the buyout. The company already is in negotiations with Utah regulators who are calling for a $50 million to $60 million rate cut, and Oregon regulators have taken a tough stance on past utility acquisitions.
Enron Corp. spent months negotiating its $3.1 billion purchase of Portland General Corp. with Oregon regulators last year. Oregon held out for rate cuts for consumers of $141 million annually before granting approval.
PacifiCorp and ScottishPower expect to get approval of the purchase from regulators in about nine months, and don't expect rate cuts to be required, said Keith McKennon, PacifiCorp chief executive.
"We're not asking for anything unusual," McKennon said.
Oregon law says any utility acquisition must benefit customers, and there's no proof that the PacifiCorp proposal does, said Robert Jenks, the head of the Oregon Citizens Utility Board, a state-financed consumer group.
PacifiCorp became a takeover target after its own attempt to merge with a British utility failed, helping to push its stock down 24 percent this year.
The company lost a multibillion-dollar bidding war for Britain's Energy Group PLC in April to Texas Utilities Co. of Dallas.
That failure, along with second-quarter electricity trading losses, led to the resignation of chief executive Fred Buckman in August.
The combined company, to be called ScottishPower, would have its headquarters in Glasgow, Scotland, and its main stock market listing in London.
Pub Date: 12/08/98