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French Power EDF Ready to Take Over British Energy
After the nuclear power company British Energy announced that it was thinking about takeover approaches earlier this year, and then subsequently held talks and meetings with EDF of France, E.ON and RWE of Germany, and Iberdrola of Spain. It is the French energy power house that has emerged as the only formal bidder for the takeover and is now only days away from clinching the �12 billion deal.
EDF has been one of the leading contenders to buy British Energy since the British Government effectively put the power company up for sale by announcing it wanted to sell its 35% stake in the nuclear operator.
According to the BBC, EDF is now prepared to pay as much as 775p per share, after British Energy released that none of the potential deals took into account the soaring wholesale electricity costs and the prospective role of its sites and the allotted plans that were in development in conjunction to Britain�s nuclear power supply.
Shares in British Energy, which is capable of producing around one-sixth of the UK's energy needs, rose to almost 6% following the report as the renewed speculation and prospect of an imminent deal excited the investors considerably. British Energy's eight nuclear power stations are Dungeness B in Kent, Hartlepool, Heysham 1 and 2 in Lancashire, Hinkley Point B in Somerset, Hunterston B in Ayrshire, Sizewell B in Suffolk and Torness in East Lothian. The group, which has around 6,000 staff, also owns a coal-fired power station at Eggborough, East Yorkshire.
EDF executives now hope to be able to announce a deal imminently. Centrica, the British power company, is also involved in some negotiations with EDF, they are seeking to secure a deal that would see it acquire 25% of British Energy.
The decisive takeover price for British Energy is still under last-minute discussions, but could go above the 750p share mark, valuing it at between �11bn and �12bn. That would secure the Government as much as �4bn. However, the net cash has already been marked for the decommission costs that are connected with dismantling nuclear power stations, nearing the end of their lives.
Despite Centrica refusing to comment on its involvement in the deal, it is understood that its executives whom are also working very busily with EDF. The British company's involvement in the deal would appease critics of the sale of the UK's only major nuclear operator to a French company.
Since Gordon Brown committed the UK to developing a brand new generation of nuclear power plants, Malcolm Wicks, the Energy minister, has commented that while the Government is not opposed to British Energy being taken over by a foreign buyer, they are alert to the sensitivities of such an issue.
The Government will also have to consider how a deal with the French power house EDF would affect other potential operators in view of a monopolising of nuclear power by the French company, given that British Energy's existing sites are likely to be the favoured locations for future constructions.
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