Hands tied to deal
Guy Hands has finally taken control of East Surrey Holdings, the utility company he was forced to purchase by the Takeover Panel.
Hands’s Terra Firm fund made a 525p-a-share offer for Northern Ireland gas distributor East Surrey in April, but then tried to get out of the deal when the country’s gas regulator said it might review the company’s pricing structure to get a better deal for consumers.
Hands then tried to pull out of the deal, but the Takeover Panel insisted that there had been no material change that would allow him to do so.
Terra Firma thought East Surrey — which also owns a water business in Surrey — was operating under a gas licence agreed in 2004. However, it turned out that this was never ratified and East Surrey was actually operating under an earlier and much more favourable 1996 licence.
The panel decided that on this basis, Terra Firma was not damaged enough to waive the normal Takeover Code. The panel sticks rigorously to these rules, which are designed to create certainty for shareholders.
The panel ruled on 16 October that Hands must abide by his original offer and the Terra Firma boss decided against an appeal.
Yesterday the High Court of Justice approved a scheme of arrangement under which the merger will be implemented.
The merger will formally take effect when the court order is received by Registrar of Companies today.