An undignified squabble for control of east German utility Veag may yet be avoided with rumours of a compromise deal between the two main duelists, Southern Energy of the US and HEW, a Hamburg-based utility backed by Sweden’s Vattenfall.

There is still no agreement over the sale of E.On’s 49 per cent stake in Berlin utility Bewag, which owns a 6.25 per cent stake in Veag, to HEW. But Southern, which is also courting Bewag, has now offered a new syndicate deal on the administration of Bewag to HEW and Vattenfall. An alliance with Veag, it is hoped, will create a fourth competitive electricity group in Germany, besides RWE, E.On and Energie Baden-Württemberg (EnBW). Both Southern and HEW want to use Bewag as a vehicle to push into the east.