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EDF agrees to buy British Energy for 15.7 billion euros

Latest update : 2008-09-24

British Energy has accepted a 15.7 billion euro takeover bid from French electricity giant EDF, which looks set to transform Britain's nuclear energy sector.

British Energy accepted a takeover bid worth more than 15 billion euros from French electricity firm EDF in a tie-up set to transform Britain's nuclear energy sector, officials said Wednesday.
The French group announced that British Energy's managers had accepted its offer and would recommend it to shareholders, prompting Britain's Prime Minister Gordon Brown to hail it as "a significant step towards the construction of a new generation of nuclear stations to power the country."
The British minister for business John Hutton called it "one of the largest foreign direct investments ever made in Britain," in a government statement.
The deal, priced at 774 pence a share, will create a new subsidiary controlled by EDF, the French group said. It expects the takeover to be sewn up by the end of 2009.
The takeover will cost EDF up to 15.7 billion euros (23 billion dollars), depending on the exact payment terms agreed by shareholders, the company said. It had earlier estimated the price as 15.6 billion.
The French group's chairman Pierre Gadonneix said: "For EDF, this is an historic milestone in our strategic development plans in Europe and enables the EDF Group to develop significantly in the UK, one of its key markets."
An earlier offer, unveiled in late July for 765 pence per share or 15.45 billion euros, was rejected by two of British Energy's shareholders, investment funds Invesco and M and G.
EDF said on Wednesday that Invesco had accepted the higher offer, which will create a new EDF subsidiary named Lake Acquisitions and will give EDF control of all British Energy's nuclear power plants.
The British energy sector has long been privatised, and the British treasury now holds 35.2 percent of British Energy.
The French state by contrast owns around 85 percent of EDF, the world's biggest producer of nuclear energy.
The British government welcomed the announcement.


New nuclear reactors
Hutton said EDF intended to build four new nuclear reactors in Britain, with a combined capacity of 6.4 gigawatts. The first of them will start operating in 2017, he said.
"The four new reactors that EDF is proposing to build would generate clean electricity to meet more than 13 percent of forecast UK electricity demand by the early 2020s," the text of the government statement added.
This would yield "a saving of more than 14 million tonnes of CO2 emissions a year, helping tackle climate change."
EDF has been established in Britain for 10 years and employs 13,000 people in its British subsidiary EDF Energy, according to the government statement. It said EDF's offer promised to create new jobs.
The Labour government wanted to sell its stake in British Energy to help fund a renewal of nuclear-power generating capacity in Britain.
British Energy provides almost one fifth of Britain's electricity and already owns and operates eight of the country's 10 nuclear power stations.
"Nuclear is clean, secure and affordable; its expansion is crucial for Britain's long term energy security, as we reduce our oil dependence and move towards a low carbon future," Brown said.
EDF shares leapt more than three percent to 51.82 euros on the Paris stock exchange on Wednesday morning after the announcement.
"This operation will allow EDF in the short term to cement its operational performance in Britain in an extremely competitive market," analysts from Natixis Securities said.
British gas company Centrica meanwhile said in a statement that it was in talks with EDF to take a 25-percent stake in the new subsidiary. Centrica had proposed to merge with British Energy if the EDF bid failed.

Date created : 2008-09-24