Centrica move brings £11bn BE deal closer

Published on Thursday 24 July 2008 10:59

A POSSIBLE £11 billion takeover of British Energy has moved a step closer, after it emerged that Centrica had held talks with French bidder EDF to buy a 25 per cent stake in the company if the deal goes through.

Discussions between EDF and Tonrness Power Station owner British Energy were said to be "positive" and despite continued wrangling over the price, it seems both sides are now confident a deal will be done.

The falling price of crude oil has helped to ease difficulties over the valuation of British Energy, the UK's main nuclear generator. Many shareholders had argued that soaring energy prices should mean a higher valuation.

It was reported this morning that Centrica had held talks with the French Government-controlled EDF about a side deal which would see them take a 25 per cent stake in British Energy after the initial takeover deal is completed.

It would give Centrica, owner of British Gas, access to power plants, which would help hedge its exposure to fluctuating wholesale energy prices.

The news came as Scottish and Southern Energy said it had seen its gas and electricity customers increase by around 350,000 to 8.8 million over the last year.

The energy provider has just been given permission to develop a 456MW wind farm at Clyde in southern Scotland, but Ian Marchant, chief executive of SSE, warned: "The extent of the energy shock with which the entire global economy is having to contend has been well-documented, and its full impact on prices for electricity and gas in the UK has still to be felt."