British Energy rejects takeover
August 1, 2008
The board of British Energy has rejected a deal which would have meant the sale of eight of the UK's nuclear power stations to a French state-owned energy firm.
EDF had been expected to announce a £12bn deal to buy British Energy.
However, it is understood that shareholders argued that the soaring price of energy meant they should be able to command a higher offer.
The rejection is a major setback to the UK's plans to cut greenhouse gases.
The government holds a 35% stake in British Energy and is believed to have backed the deal.
The deal would have raised as much as £4bn for the chancellor.
EDF had been expected to announce a £12bn deal to buy British Energy.
However, it is understood that shareholders argued that the soaring price of energy meant they should be able to command a higher offer.
The rejection is a major setback to the UK's plans to cut greenhouse gases.
The government holds a 35% stake in British Energy and is believed to have backed the deal.
The deal would have raised as much as £4bn for the chancellor.
But it reaffirmed the UK government's commitment to nuclear power, and it said that the rise in oil prices had only made the case for new nuclear plants even stronger.
Both companies issued terse statements about the breakdown of the talks.
EDF said that conditions were not right for it to proceed with the deal.
British Energy said "advanced discussions" had continued but that no agreement had been made to date.
It added that there could be no certainty that the talks would lead to an offer being made.
Government stake
EDF, which is 85% owned by the French government, is the biggest nuclear power generator in the world.
"After in-depth discussions, EDF considers that the conditions for a major development in Great Britain are not met to date," the Paris-based company said in a statement.
The announcement came shortly before the firm was due to release its half-year earnings.
British Energy, which generates about 20% of the UK's electricity, is part-owned by the British government which 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.
Centrica was negotiating with EDF to be its minority partner in the acquisition, and was expected to pay around £3bn for a 25% stake.
'Interest high'
British Energy's sites are considered prime locations for the government's proposed new generation of nuclear power plants.
EDF has other options for developing nuclear facilities in the UK, having bought land adjacent to two existing nuclear plants.
A spokesman for the Department for Business, Enterprise & Regulatory Reform said: "Our commitment to nuclear power is clear.
"The go ahead for new nuclear power, alongside our action to promote energy saving and renewables is in Britain's long term national interest.
"The level of interest in nuclear new build remains high and recent months have shown there are strong signals of an appetite for this from the market."
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