Enlarge imageBy Mark Potter
LONDON (Reuters) - Scottish Power has removed chief executive Ian Russell and replaced him with Philip Bowman, fuelling speculation the man who sold drinks group Allied Domecq might steer the utility towards a deal with Germany’s E.ON.
Scottish Power, which rejected a 10.7 billion pound ($18.8 billion) bid proposal from Germany’s E.ON AG in November, said on Thursday Russell was leaving by mutual consent and that Bowman, 53, would take over from January 16.
Last year, Bowman steered Allied Domecq through a 7.4
billion pound takeover by France’s Pernod Ricard Industry analysts were divided whether Bowman’s appointment
made a deal with E.ON, or another party, more likely. "There’s bound to be some read across," said one. "Russell
led the opposition to E.ON, while Bowman sold the last business
he was boss of". But others questioned why Scottish Power would recruit such
a high-profile executive, and why Bowman would accept the job,
if the company was just gearing itself up for sale. "I think it is bolstering management, rather than bringing
somebody in who’s going to say ’yes’ to a bid," said Angelos
Anastasiou at Williams de Broe. "Ian Russell...spearheaded the
acquisitions that have subsequently proved to be failures". Britain’s fifth-biggest energy supplier has attracted bid
interest since agreeing to sell U.S. unit PacifiCorp to Warren
Buffett’s Berkshire Hathaway for $5.1 billion last year. It
bought PacifiCorp for about $10 billion in 1999. M&A FEVER At 0855 GMT, Scottish Power shares were up 2.5 percent at
556-1/2 pence, the second-biggest rise on the benchmark
FTSE-100 index and valuing the business at 10.4 billion pounds.
The stock reached a high of 565-1/2p, its highest since late
November. "I would say the shares are going up because he (Bowman) is
a better manager, but everyone has still got M&A fever as
well," said one London equities traders. A Scottish Power spokesman said the change in chief
executive was not connected to the firm’s decision to reject a
570-pence-a-share takeover proposal from E.ON in November. "He (Bowman) has extensive experience at the helm of major
public companies and a consistent track record of building
value for shareholders," Scottish Power Chairman Charles Miller
Smith said in a statement. "He will bring a fresh perspective to Scottish Power". Scottish Power also said it was on track to deliver strong
results for its full financial year. E.ON walked away from Scottish Power in November, barring
the German firm under UK takeover rules from making a fresh
approach for six months. However, E.ON UK Chief Executive Paul Golby left the way
open for a fresh takeover attempt in a newspaper interview at
the weekend. "Who knows what will happen in six months’ time. The
ambition to grow hasn’t gone away," he told the Times
newspaper. E.ON was not immediately available for comment on Thursday.
At 0855 GMT, E.ON shares were up 0.4 percent at 89.3 euros. Scottish Power declined to say how much Bowman would be
paid or give details of Russell’s severance package. (Additional reporting by Mark Meadows in London and Mantik
Kusjanto in Frankfurt)
