French power giant EDF seals takeover of British Energy


French power giant EDF is today expected to seal its protracted £12bn pursuit of nuclear generator British Energy that will kick-start the government's plans to build a new generation of atomic reactors.

British Gas-owner Centrica is also preparing to say it is in talks with EDF about taking a 25% stake in BE, based on the same 774p a share price as EDF will pay. The partners will split all future profits 75/25 in favour of the French.

The EDF board held a meeting in Paris last night to thrash out the details of the offer, and the group is expected to announce the agreed deal to stock exchanges in Paris and London this morning.

A source said: 'It fell at the final hurdle last time, so I won't believe it until I see it in black and white. But plan A is for an announcement in the morning at 774p.'

BE and EDF have been in a rocky courtship since at least March. In June, the French state- owned group's initial offer of 765p was rebuffed at the eleventh hour by BE investors Invesco and the Prudential's funds arm M&G, which own 15% and 7% respectively.

However, the sweetened proposal is thought to have won over Invesco.

EDF Power games: EDF, the French energy company, will takeover British Energy today for £12bn


Britain's government, which has a 35% holding in BE, has been playing unlikely cupid as tries to force the two down the aisle. Number 10 favours the French firm for its experience in building 58 atomic power stations around the world.

Prime Minister Gordon Brown gave the green light in January to build a fleet of new reactors to help cut carbon emissions and reduce the country's reliance on overpriced energy imports from places like Russia. The deal will put EDF in the box seat to run any new nuclear stations, with Centrica also expected to participate in the programme in order to maintain British interest in reshaping the future of the country's power generation.

It is thought that Centrica's involvement might be good news for British Gas customers.

It means the group will be able to generate 40% of the power needed to fulfil customer needs, leaving just 60% bought in the wholesale gas market.

Centrica (up 41/2p at 3301/2p) currently buys 70% of its requirements in the wholesale market, which pushes up the price to consumers.



Although it favours EDF, the government is still concerned that no single company should have a monopoly over plans to build new atomic reactors in the UK. As a result, Number 10 is insisting on a guarantee that at least one of BE's nine sites should be sold to third parties as a condition of the sale of its stake.

Bradwell in Essex and Dungeness in Kent are viewed as the most likely sites to be offloaded by the French. Bradwell, which includes plots of land owned by both BE and the Nuclear Decommissioning Authority, had an operational reactor between 1962 and 2002 but the plant is now being decommissioned.

BE (down 71/2p at 724p) operates eight nuclear power plants and one coal-fired station, and generates about 20% of Britain's electricity. The sale of BE is crucial to the government's plans to create a new generation of reactors because its sites already have hard to get planning consent for nuclear operations.

EDF, or Electricite de France, is the main power generation company in France.

It was founded in 1946 as a result of the nationalisation of a number of electricity producers by the Communist Minister of Industrial Production, Marcel Paul.

Until November 2004 it was a government corporation. The French authorities partially floated shares of the group on the Paris Stock Exchange in November 2005, although the French state still owns almost 85%.

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