EDF expected to announce takeover

Sep 24 2008

French giant EDF is expected to announce a £12.4bn takeover of nuclear power firm British Energy in a milestone deal for the UK's energy sector.

The offer is worth a reported 774p a share, 9p higher than the price offered in July which was rejected as too low by major British Energy shareholders.

EDF has called a press conference in Paris during which the deal is expected to be announced. A spokesman for the group declined to say what the conference was about.

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 and is the world's largest nuclear power provider, was scuppered by opposition from institutional shareholders such as Invesco and M&G who argued the price undervalued BE at a time when the value of energy assets was rising. However, oil's slide from July's 147 US dollar 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.