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British Energy, EDF yet to strike takeover deal

LONDON - British Energy, the nuclear power operator, said Friday it has yet to reach an agreement regarding a takeover by French energy giant EDF, while neither party gave a reason for a breakdown in talks.

The BBC reported that major shareholders in British Energy, Invesco and Prudential, were holding out for a higher price owing to the surging cost of fuels.

British Energy said in a short statement to the London Stock Exchange that ‘advanced discussions with a party have continued but without agreement to date,’ leading to a sharp drop in its share price early Friday.

EDF, the world's largest nuclear power supplier and already Europe's number one electricity producer, had been widely expected to confirm that a deal had been struck to buy British Energy, which has a market value of 12 billion pounds (15.5 billion euros, 24 billion dollars).

But in a statement overnight Thursday, Electricite de France, in which the French government is the majority shareholder, said conditions were not right for ‘a major development in Great Britain.’

Elaborating at a press conference Friday in Paris, its chairman and chief executive Pierre Gadonneix said financial conditions enabling EDF to assuming a bigger role in Britain had yet to come together.

He added that, in light of a trend towards nuclear power in several markets, EDF -- which Friday declared a 12.2 percent drop in half-term profits to 3.08 billion euros despite higher revenues -- intended to play a leading role.

A source close to talks with British Energy had told AFP on Thursday that the French group's directors had backed a takeover.

The bid was said to have been in the form of either a cash-only deal worth 765 pence per share or a cash option worth 700 pence a share plus shares, according to the Dow Jones financial news agency.

The offer was aimed at the British government's 35.2 percent stake in British Energy. Under British takeover rules, any bid for the government stake would trigger an offer for the rest of group.

In early European stock market trading on Friday, British Energy's share price was showing a fall of 6.31 percent to 683.50 pence on London's FTSE 100, which was down half a percent.

EDF grew 0.27 percent to 56.10 euros on the Paris CAC 40, which was 0.68 percent lower.

British Energy provides almost one fifth of Britain's electricity and owns and operates eight nuclear power stations.

Last month, British Energy said that a series of takeover proposals received from unnamed parties had undervalued the company.

The British government, meanwhile, wants to see a renewal of its nuclear-power generating capacity and the assets owned by British Energy are seen as a springboard for any such effort.

An EDF-British Energy tie-up, which could also include the participation of British gas group Centrica, would strengthen EDF's presence in Europe. It now wants to focus its operations there after having withdrawn from Brazil and Argentina in 2007.

EDF is already active in Britain through its subsidiary EDF Energy, as well as in Germany and Italy.

The company is 84.8 percent controlled by the state, 13.3 percent by institutional and other investors and 1.9 percent by its employees.

With a market capitalisation of about 102 billion euros, it is the second largest French company after oil giant Total.