French 'seal nuclear firm takeover'

Tuesday, September 23, 2008

Nuclear power firm British Energy looks poised to fall into foreign hands after it was reported French power giant EDF has agreed a £12.4 billion takeover of the firm.

The deal is worth 774p a share, the Wall Street Journal said, 9p higher than a rebuffed offer made in July.

EDF has called a press conference in Paris on Wednesday during which the deal will reportedly be announced. A spokesman for the group declined to say what it was about. No-one from British Energy (BE) was immediately available for comment.

If confirmed, the takeover will ensure the French group plays a leading role in the development of new UK nuclear power stations, which are likely to be built on BE's existing sites.

It will also allow the UK Government to bank a multi-billion pound windfall from its 36% stake in the firm.

The July offer from EDF, which is majority owned by the French Government, was scuppered by opposition from major BE shareholders who said the price undervalued the firm at a time when the value of energy assets was rising. However, oil's fall from July's peak is thought likely to have persuaded some investors to be more flexible over price demands.

If an EDF takeover goes ahead, there is speculation British Gas owner Centrica could take a minority stake in the business.

Centrica has considered a number of other options including an all-share merger with BE. It is also mooting a long-term deal to buy power from BE, as well as participating in its potential new nuclear developments.

BE operates eight nuclear sites in the UK and has land around them where new reactors could be built.

Its eight nuclear power stations are Dungeness B in Kent, Hartlepool, Heysham 1 and 2 in Lancashire, Hinkley Point B in Somerset, Hunterston B in Ayrshire, Sizewell B in Suffolk and Torness in East Lothian. The group also owns a coal-fired power station at Eggborough, North Yorkshire.

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