NORTHERN Electric and Gas could be changing hands soon.

The power firm has been put up for sale by its US parent company, Mid-American Energy Holdings.

It is believed to be on the shopping list of Texas-based TXU, which already owns Eastern Energy and Norweb.

It is believed to have tabled a bid in excess of £500m for Northern's supply business, but not its electricity distribution arm.

TXU is the largest electricity supplier and second largest gas supplier, after Centrica, in the UK. It has more than 5.5 million customers.

Earlier talks between the two companies are believed to have failed because of the proposed structure of the deal.

Northern is seen as TXU's last chance to acquire a large number of customers in a single deal following the sale of Yorkshire Electricity to Innogy, part of the former National Power empire.

This is not the first time Northern has been rumoured to be the target for takeover. In April it was believed to be the target of the UK's second largest power generator Powergen.

Earlier this year Powergen was bought by German utility company E.on for £9.6bn. Until that merger is complete, any deal for Northern is unlikely to progress.

The deal with Northern could be the first of many for TXU, which has plans to expand in the UK market.

Northern Electric and Gas employs more than 3,500 staff in Newcastle. It plans to move its head office site from Carliol House, in the city, to Cobalt Business Park, North Tyneside.

Northern was bought by Mid-American Holdings, formerly known as Cal Energy, in 1996, in a £782m deal.

Last year, Mid-American was acquired by Berkshire Hathaway, legendary billionaire investor Warren Buffet's investment arm in a £6bn deal.

No one at TXU was available for comment on the proposed takeover.

Julian Kenyon, public affairs manager at Northern Electric and Gas said: "It is the policy of Northern Electric not to comment on speculation or rumours about possible acquisitions, dispositions or combinations of businesses."