British Energy pulls out of EDF takeover

Following months of talks, it has been confirmed that British Energy has backed out of a £12 billion deal with French energy giant, EDF.

It is believed that two of British Energy’s major shareholders rejected the deal after holding out for a higher price.

It is unknown who the shareholders were but investors include Invesco, who own a 15% stake in British Energy, Prudential holds 7.2%, while Deutsche Bank has a 7.56% share.

It is understood that EDF have proposed two offers: a 765p cash bid or 700p in cash plus further payments based on performance.

Earlier this year, British Energy was in discussions with many energy companies, including RWE of Germany, Iberdrola of Spain and Vattenfall of Sweden. However, EDF became the favourite to buy the company after making an offer of 680p a share in May. This was subsequently rejected and talks continued.

The government holds a 35% stake in British Energy and was said to be in full support of the deal. The collapse of the bid is a major setback to the Government’s nuclear programme whose plan was to reduce greenhouse gases by relying more on nuclear energy.

British Energy operates eight ageing nuclear power stations and generates one sixth of Britain’s electricity. Under the terms of the deal, EDF had proposed building four nuclear power stations using French technology.

EDF is 85% owned by the French Government and is the largest nuclear power generator in the world.

Following the collapse, statements were issued by the companies after EDF said that conditions were not right for it to go ahead with the deal, while British Energy said advanced discussions had proceeded but no agreement had been made thus far.

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