THE takeover wave which has engulfed Britain’s utility sector since the mid 90s had until now passed Viridian by.

The Northern Ireland electricity business was seen as a bit of a standalone — geographically isolated and so unable to offer much in the way of physical synergies with other utilities. And for reasons of geography again, neither was it able to embrace competition as the other British power companies could.

But all this is changing as Ireland prepares to roll out competition across its border for domestic customers. Many business consumers can already choose their supplier. The first phase of the roll-out will begin next year, and by 2011 a second interconnector between Nothern Ireland and the Republic is planned to be built which will facilitate full competition.

Viridian operates electricity transmission and distribution in Northern Ireland and has a growing generation business in the Republic. The Northern Ireland business last year got a third of its revenues from the Republic. And competition will roll out further as Ireland’s economy continues to enjoy strong growth.

Arcapita Bank, through its ElectricInvest utility division, is offering a full price for Viridian, partly for the growth potential that the all-island power project will bring. But the private equity group, which owns South Staffordshire Water and a clutch of wind farms in the UK, says that it prizes Viridian’s stable cashflow the most.

Arcapita will keep the present Viridian management team in place if its recommended bid is successful and it has said that it is a long-term investor. Arcapita has investments in the US where it has a base in Atlanta and specialises in infrastructure investments, property and venture capital.

The Bahrain-based bank’s £1.62 billion bid represents a premium of 23 per cent over the closing price on Wednesday, the day before Viridian said that it had received an approach, and a premium of

37 per cent to the average share price over the six months to October 4.

Investors will receive £13.36 a share, which includes an 11p dividend payment that will be made for the six months to September.

It is difficult to see a higher offer coming in to rival Arcapita and the premium compares favourably with other recent bids in the utilities sector. It seems an offer worth accepting.

Freeport

FREEPORT, the European designer outlet centre, has suffered a torrid time over the past few years, but yesterday it attempted to draw a line under its problems by announcing that it was suspending dividend payments as it unveiled widening losses after property write-downs. The move was followed by a 3 per cent fall in the company’s share price.

Iestyn Roberts, an experienced executive in the designer outlet field, has been appointed chief executive and he should be able to steady the ship.

During a spell between 1999 and 2002 as European Commercial Director of BAA McArthurGlen, Europe’s biggest European outlet developer, Mr Roberts launched four developments and turned round three more centres. He arrives in the wake of an operational review of the group’s existing sites, which saw asset values cut by 12.5 per cent to £188 million.

In theory, this should give the company some room to manoeuvre as empty space is let and occupancy levels begin to increase, the valuations could begin to recover. Nevertheless, without the comfort of the kind of long leases shopping centre owners enjoy, Freeport is left more exposed in weak market conditions. In the short term, the share price is likely to be underpinned by the prospect of a bid emerging, Laxey, the activist investor, which has built a 29.75 per cent stake in the company, has hired NM Rothschild to review its options, which could include a possible offer.

Meanwhile private equity groups including Carlyle are still circling in the background.

At the current price the shares are still trading at a 22 per cent premium to net asset value, which may explain why bidders have not yet made a move. The danger is that the shares remain artificially high on the back of bid speculation, but that high price creates an impediment to a deal.

Given Laxey’s large stake, it is unlikely to want to sell out unless it can realise a substantial gain, which will make it hard for other bidders.

The worst may now be over, but at the current price there is little temptation to buy. Avoid.

Game Group

GAME Group, the specialist retailer of computer software and video games unsettled the City yesterday with the surprise news that Martin Long, its chief executive would be leaving the business after 13 years.

Mr Long will be replaced by his deputy, Lisa Morgan, a product expert and one of the most influential people in the gaming industries. City sources said that Mr Long will receive an estimated £550,000 payoff.

It is thought that Mr Long’s departure will create little disruption ahead of the critical Christmas trading period, given the huge amount of experience that Ms Morgan will bring to the job. Game Group’s half-year results, which were released at the end of last month, were in line with forecasts and trade remained strong in August and September.

With a raft of new gaming hardware due for release, including the launch of the Nintendo Wii, Game Group should be optimistic of a good Christmas. With the shares trading on an undemanding 13 times future earnings, with a prospective 3.5 per cent dividend yield, they are worth buying.

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