British Energy shares fall as auction attracts little interest

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The Independent Online

Shares in British Energy fell yesterday after another deadline for bids passed with only limited interest shown in the nuclear energy producer.

EDF Energy, the French state-owned power group, is understood to have submitted a bid for the operator of the UK's nuclear reactors, but hoped-for offers from other suitors including RWE, Iberdrola and Centrica failed to materialise.

The apparent lack of interest will be disappointing for the Government, which is keen to reap a windfall via its 35 per cent stake in the company. At around 700p, the Treasury could pocket more than £4bn at a time when tax and stamp duty receipts are falling and state spending is rising.

EDF declined to comment but it is thought that its offer came in below the 715p-per-share level at which British Energy shares closed on Thursday, the day before the deadline. BE shares dropped as low as 685p before ending the day off 14p at 701p as hopes of an auction faded.

After what had previously been described by Rothschild, the bank running the auction, as a definitive deadline for indicative bids, Friday's tepid showing led to a massaging of that stance. Now, the bank is understood to have told bidders that they can have more time. "May 9 was never a hard deadline," a British Energy spokesman said. A source involved in the situation said: "You can't have an auction with just one bidder."

It is thought that a rival bid could be tabled next week. A spokesman for Iberdrola in Madrid declined to comment on whether it was interested in bidding. He reiterated the group's stance: "We are examining opportunities in the UK market." Other bidders are thought to be biding their time until EDF sets a threshold by tabling a firm offer before making their moves. The French group also confirmed yesterday that it had bought plots of land next to reactors in Hinkley Point and Wylfa to position itself in case it loses out on British Energy. Sites situated next to current reactors are seen as the most viable for new plants.

Centrica, which is keen to take some type of junior equity partner role with the eventual winner, remains in contact with both Iberdrola and EDF.

Malcolm Wicks, the Secretary of State for Energy, has said that the Government wants to ensure that the country's nuclear industry is not controlled by one company. Industry sources thus expect the Government to mandate the inclusion of a partner with the ultimate winning bidder, or to order divestments of some sites to rivals.