Outlook: British Energy
Thursday 12 November 1998
More nuclear stations remain the long-term banker. But the new management team under Peter Hollins has decided that it is time to diversify into the wider energy market. So he has tabled a pounds 2bn bid for London Electricity and is also toying with the idea of forking out another pounds 1bn for a pair of coal-fired stations from either PowerGen or National Power.
With zero debt and a market capitalisation of pounds 4bn - more than double its value at flotation - BE could comfortably fund both acquisitions. There is the small matter of financing its ongoing nuclear liabilities, but what better stream of income to tap than London's monopoly distribution business?
So an offer for London looks logical, even if the other shortlisted bidder, France's state-owned EDF, is using taxpayers' money to drive the auction up to fancy prices. However, by attempting to acquire some coal-fired stations as well, BE may find its enthusiasm to diversify backfiring painfully. The Government might be prepared to allow BE to swallow London, overlooking the fact that it also controls 21 per cent of the generating market.
But by buying a couple of coal-fired stations too, BE would make itself a price-setter, in which case it could find itself in the position of PowerGen and have to sell assets in order to integrate vertically.
Mr Hollins would be better to settle for one or the other, or he might find himself missing out on both. Since he won't see another nuclear station built during his working life, even if the politicians do eventually bow to the environmental argument, that would be an ominous start to his career in BE.
- 1 Al Pacino on suffering from depression: 'It can last and it's terrifying'
- 2 Half of young women unable to ‘locate vagina’ and 65% find it difficult to say the word
- 3 Saudis risk new Muslim division with proposal to move Mohamed’s tomb
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
Perez Hilton apologises for Jennifer Lawrence naked photo leak
Victoria Justice on naked photo leak: 'Let me nip this in the bud right now'
4Chan 'nude photo hacker' claims there are hundreds more celebrity images to be published
Saudis risk new Muslim division with proposal to move Mohamed’s tomb
Ariana Grande nude photos leak: 'These are completely fake' say singer's representatives
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
With Douglas Carswell joining Ukip, my party has taken another giant step forward
When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
Ukip Douglas Carswell defection: Tory MP jumps ship to join Nigel Farage
iJobs Money & Business
£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...
£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...
£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...
£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...