French bid for BE back on agenda

HOPES that EDF's plan to buy British Energy had been revived were played down by analysts yesterday despite reports the French company was making progress with the nuclear company's shareholders.

EDF had its 765p bid for BE – which valued the East Kilbride-based nuclear power firm at £12 billion – rejected by the major institutional shareholders as too low last month.

Now EDF has reportedly made progress towards an agreement with Invesco Perpetual – BE's second-largest shareholder behind the government – and is preparing a fresh, higher bid.

But shares in BE eased yesterday as analysts predicted the EDF bid would still fail.

Lakis Athanasiou, an analyst at Evolution Securities, predicted the deal would not go ahead, as EDF would have to increase its offer "significantly".

Athanasiou said the UK government was "the biggest disruptive factor" in the way of a deal, because it wrongly believed EDF was needed for new nuclear development in the UK.

Meanwhile M&G, BE's third-largest shareholder with a stake of more than 7 per cent, said it had held "constructive" talks with Centrica, the owners of British Gas, which also wants to merge with British Energy.

BE has not itself held talks with Centrica, sources said.