In 2006 William Franklin will be seeking profitable opportunities to speculate in the share price movements of European power companies...eg. the Essen-based RWE and the Swedish-based Vattenfall. The financial pages of The Independent made the following remarks on Wednesday 11th January 2006.

The future of Scottish & Southern Energy was a major talking point in City dealing rooms yesterday. Shares in the power group jumped 7.5p to 1017p on speculation of a bid for the company from Vattenfall, the Swedish state-owned utility. Vattenfall already has operations abroad - mainly in Germany, Poland and Finland - and is said to be keen to expand in the UK.

Citigroup argued that Scottish & Southern represents an excellent strategic asset for anyone looking to make a major move into the UK utility sector. But it warned that the Swedish group will have to pay top dollar if it is to win the company. The US broker said: ‘Scottish & Southern is highly regarded by its shareholders and is fiercely independent. Therefore, any acquirer would likely have to pay a significant control premium.’

Citigroup pointed out that RWE bought Innogy on a rating of 11 times earnings in 2002. Should Vattenfall decide to pay a similar valuation for Scottish & Southern, it would ahve to spend 1397p a share for control of the group - a 38 percent premium to the stock’s current level. of course, Vattenfall could also target Scottish Power, up 4.5p to 540.5p, which recently rebuffed a 570p share bid from Germany’s E.ON.