EDF launches bid

Cliff Feltham
Wednesday 24 September 2008 00:00 BST
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French energy giant EDF is today expected to launch its long awaited £12.4 billion bid for UK nuclear power operator British Energy.

Barring any last minute change of heart, the French will make an agreed offer worth 774p a share or 9p above the terms rejected in July.

The UK government which owns 35 per cent of BE will give its blessing to the deal. As well as picking up a windfall profit for its holding it will also give a huge boost to the revival of the nuclear power industry in the UK.

The takeover, following eight months of on-off discussions, will give EDF control of eight nuclear sites in the UK with potential for building new reactors.

The French group already supplies gas and electricity to around 5 million householders in this country.

EDF, which is 85 per cent owned by the French government, has huge experience of the nuclear industry. Its 58 plants generate around 77 per cent of France's electricity.

Two large institutions, Invesco and M& G, initially dug their heels in when the French attempted to pull off a deal in the summer. Both felt BE was worth more than was on the table. The revised offer will include a cash alternative of 700p coupled with an option known as contingent value rights giving investors the chance to share in the future profits of the business.

There is speculation that part of the deal will involve stripping out two nuclear stations, Dungeness in Kent and Bradwell in Essex which will be auctioned off later in the year in a bid to inject more competition into the industry. There would be no shortage of buyers, among those tipped including RWE of Germany and Iberdrola of Spain.

One issue as yet unresolved in the future role of Centrica, the country's biggest energy supplier. Last month it said it was in talks to take a minority stake in BE if it was sold. Centrica has been anxious to diversify in order to reduce its exposure to energy market fluctuations.

There is speculation the UK government may have brokered some arrangement giving Centrica a role in the future structure of the nuclear industry.

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