business

How Britain Could Juice Up Houston

Now, it's the power companies' turn in the takeover game: PECO Energy is going after rival Pennsylvania Power & Light in a hostile $3.6 billion offer. And Union Electric has agreed to merge with Midwest utility Cipsco. But it's the overseas market that is beckoning Houston Industries (HOU), the holding company for Houston Lighting & Power--and a cash-laden outfit: In January, it sold its cable-TV unit, KBLCOM, to Time Warner for $2.4 billion in cash and stock. Houston Industries reaped about $700 million in cash from the deal.

Some investment bankers say Houston Industries is seriously considering buying a utility in Britain that's making good money, with revenues last year of about $2 billion. "Number-crunchers at Houston Industries have been busy sizing up the British utility," one analyst says--which would provide a tremendous vehicle in the utility's quest to expand in Europe.

Already, through one of its subsidiaries, Houston Industries Energy, has gotten involved in various power-development projects in Argentina, Brazil, and India. In the U.S., Houston Industries generates and distributes electricity on the Gulf Coast.

Houston Industries has also joined Power to Brazil, a consortium comprising two private Brazilian utilities and a group of investors, to bid for a stake in Brazil's state-run power-generating company, which the government is trying to privatize.

One big investor in Houston Industries says of such acquisitions: "In the utility business, the overseas market is where the growth will be."

BY GENE G. MARCIAL

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