Doubt over EDF plan to buy British Energy

Published on Friday 1 August 2008 10:39

THE sale of most of the UK's nuclear power stations to a French state-owned energy group was in the balance today after a last-minute snag.

EDF had been widely expected to complete the 12 billion takeover of British Energy (BE) this morning.

But the company said today that conditions are not right to proceed with the purchase.

Following EDF's announcement, British Energy said "advanced" discussions with an unnamed party are continuing although "there can be no certainty that the discussions will lead to an offer".

FTSE 100 Index-listed British Energy first announced talks with potential suitors in March.

Six years ago the company needed a government bail-out as plunging wholesale electricity prices brought the business to the brink of insolvency.

The UK Government still owns a 36 per cent stake in the business, which has eight power stations including Torness in East Lothian.

EDF's first offer of 680p a share was rejected as too low, but the French group then indicated that it would be prepared to offer slightly more to reflect the rise in power prices in the UK.

A member of EDF's board had confirmed yesterday that it agreed an offer which was being considered by BE's board.

But hours before the deal was due to be confirmed today, EDF said in a statement: "After in-depth discussions, EDF considers that the conditions for a major development in Great Britain are not met to date."

BE is set to be a major player in the development of a new generation of nuclear power plants.

When given the go-ahead, the new plants are likely to be built on the sites of the existing power stations, owned by BE.

It would have left EDF well placed to benefit from a nuclear building boom. It had 38.5 million customers across Europe at the end of last year.

In a statement today, British Energy said: "Further to the announcement made on July 24, 2008, advanced discussions with a party have continued but without agreement to date.

"There can be no certainty that the discussions will lead to an offer being made for British Energy Group."