EDF close to £12bn buy of British Energy

British Energy is close to approving a £12bn bid from French energy giant EDF as the Government insisted that Britain must press ahead with new coal and nuclear power stations.

The on-off saga surrounding British Energy's future is expected to be resolved later this week when EDF makes an agreed offer worth 774p a share. There will be an alternative offer worth 700p giving investors rights to share in profits based on future power prices.

BE closed at 728p, up 8p. The company rejected an earlier offer worth 765p after objections from key institutions Invesco and M&G who are now understood to have accepted the revised terms. The deal will trigger an estimated £4bn windfall for the Government, which holds a 35 per cent stake in BE and which has been keen to see EDF, which operates 58 power stations in France, use its expertise to increase expansion of nuclear power in Britain by rolling out new plants.

As part of the deal two nuclear stations, Dungeness in Kent and Bradwell in Essex, are likely to be spun out of EDF ownership and auctioned off later in the year in a bid to generate additional competition in the sector. They could fall into the hands of operators such as RWE of Germany or Iberdrola of Spain.

John Hutton, the Business Secretary, who has been promoting the building of new nuclear plants, called for a "renaissance" in nuclear energy at the Labour Party conference yesterday.