British Energy close to sale deal

By Robert Peston, BBC business editor, BBC website, 24th July 2008

French energy firm EDF and British Gas owner Centrica are set to announce that they have bought UK nuclear firm British Energy, the BBC has learned.

The BBC's business editor Robert Peston said EDF and Centrica will probably announce early next week they are paying more than £12bn for the company.

British Energy, which owns eight UK nuclear power stations, has been on the auction block for months.

The deal could raise as much as £4bn for the Chancellor.

British Energy has been part-owned by the UK government which now wants to sell its stake. The firm was privatised in 1996 but ended up being bailed out in 2002 by the government after running into severe financial difficulties.

One source told the BBC that "there's a push to conclude a deal before the holiday. We hope it will be done in the next few days."

British Energy's board is insisting that EDF pay more than 750p a share, perhaps as much as 775p - which would value the company at well over £12bn - having rejected an offer of 680p made by EDF in May.

The deal is not yet finalised and could still be delayed.

But as and when the deal is done, up to a quarter of British Energy is likely to remain British.

Ownership

Centrica, owner of British Gas, is negotiating with EDF to be its minority partner in the acquisition and may end up paying around £3bn for a 25% stake in British Energy.

However the deal is likely to be controversial on several fronts, including whether EDF should be able to develop new power plants on existing British Energy sites.

There is also the issue of whether the UK 's energy needs should be placed in the hands of a firm run by a French company.

Another key concern is what will happen to the money that the Department for Business is tipped to make when it sells its share in the nuclear firm, and how that money will be invested.

http://news.bbc.co.uk/1/hi/business/7523498.stm