Ministers seek British Energy deal before Labour conference
Monday 08 September 2008
The government is pressing for a resolution to the British Energy takeover talks before the start of the Labour Party conference in two weeks' time.
EDF looks set to win thebattle, despite the rejection of its £12bn offer at the start ofAugust, with possible sweeteners of up to £1.5bn reportedly wooing previously sceptical shareholders.
But the Government – which supports the French bid because of the experience it can bring to plans for a major expansion of the UK nuclear industry – is getting impatient.
"The Government wants it wrapped up before the party conference," a source said. "It is important for government, not just for the cash but because it is about getting the investment needed for the UK's nuclear renaissance."
The initial bid talks collapsed when two of British Energy's largest shareholders, M&G and Invesco Perpetual, dismissed the price as too cheap. But discussions with EDF have continued – largely because the UK government, which owns 35 per cent of British Energy, is a supporter of the deal.
Invesco, at least, appears to be overcoming its scepticism. Last month, Neil Woodford, Invesco's head of investment, was still saying that a tie-up with EDF's rival Centrica made sense. But last week the 15 per cent-shareholder is believed to have held talks with EDF and softened towards the French deal, at least in part because of the implications of the falling oil price.
But it is not a dead cert. Only last week, M&G, which owns 7per cent of British Energy, described talks with Centrica as "constructive" and re-emphasised its preference for a Centrica deal.
Sources close to the British Energy negotiations say progress has been made, but no announcement is imminent.
Nuclear energy is central to government plans to meet environmental targets and boost the capacity of the UK's power supplies. By 2015 the majority of the UK's coal-fired plants will fall foul of carbon-emissions regulations and be closed down. All but one of British Energy's eight nuclear reactors will be decommissioned by 2020.
EDF already has 58 reactors in France and generates more than four-fifths of the country's electricity. The group wants to open four nuclear sites in the UK.
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