UK cold on French nuclear offer

By Paul Dobson  |   2008-8-2  |     NEWSPAPER EDITION

THE British Energy Group Plc, the UK's biggest nuclear power producer, has rejected a 12-billion-pound (US$23.8 billion) takeover offer from Electricite de France SA, insiders said.

British Energy wouldn't back yesterday's offer of 765 pence a share from the Paris-based company, Europe's largest power generator, because some of its largest investors would reject the approach at that price, said the insiders. The UK government endorsed the French utility's approach.

Both companies left the door open for talks. Electricite de France, which reported a 12-percent decline in profit yesterday, said conditions for expanding in the UK "are not met to date." The two utilities said discussions are still continuing, with "no certainty" there'll be another offer. "It all hinged on their major shareholders," Lakis Athanasiou, an analyst at Evolution Securities Ltd in London, said yesterday. "There wasn't sufficient upside."

British Energy's biggest shareholders, apart from the UK government, which owns a 35.6-percent stake, are Invesco Ltd, Deutsche Bank AG and Prudential Plc, according to data compiled by Bloomberg News.

Paris-based Electricite de France, which already has 7.9 million customers in the UK, would have won control of eight UK atomic plant sites with potential for building new reactors if it had reached agreement on a deal yesterday. The UK government wants investment in new nuclear plants and is identifying sites for reactors.

The UK government is disappointed by the failure to reach a deal overnight, Business Secretary John Hutton said yesterday in a radio interview with the BBC. It was a reasonable offer that the government was prepared to accept, Hutton said.

If this deal is not able to go through, the government will look at alternatives to ensure new nuclear stations are built, Hutton told the BBC.

"As we indicated last night after detailed discussion we have concluded that the conditions, notably financial, are not in place today," EDF Chief Executive Officer Pierre Gadonneix told reporters in Paris. "This does not put into question our investment projects internationally, and in particular in the UK. We have the intention to be a major actor in the UK nuclear market."

Prime Minister Gordon Brown said on June 22 in Saudi Arabia that he backs new atomic plants. Last year nuclear reactors produced 19 percent of the UK's power. While Brown favors the technology because it emits less carbon dioxide, the gas blamed for global warming, than natural gas and coal-fed stations, he hasn't set a growth target for the industry.

UK Energy Minister Malcolm Wicks said in a Bloomberg Television interview on April 17 that Britain is wary of a monopoly company or business group having control of all new nuclear power stations in Britain.