Call for British Energy to join forces with Centrica

Published on Monday 25 August 2008 10:55

BRITISH Energy's biggest investor, Invesco, has called for the nuclear power generator to merge with British Gas owner Centrica.

Neil Woodford, investment head at Invesco, which has a 15 per cent stake in British Energy worth around 1.5 billion, said a merger was the best solution to the problems of both companies.

A takeover of British Energy has been viewed as the best way of supporting the UK's plans to build a new generation of nuclear plants over the next 20 years.

Centrica revived the prospect of a 22.5bn all-share merger with British Energy, which owns Torness power station, after it had first been discussed at the start of the year.

French power group EDF had been poised to buy British Energy for 12bn, but the deal stalled at the last minute because of disagreement over the price.

The Government, which owns a 35.5 per cent stake of British Energy, was understood to be hesitant, preferring a cash sale of its stake to a share merger.

Centrica has since indicated it would be prepared to pay cash for the Government's stake, and Invesco spoke out for the first time over the weekend to argue that a merger was the "obvious solution" for both companies.

Mr Woodford said: "British Energy is long capacity and short customers, while Centrica is the other way round. They would make a great combination."