French EDF and British Energy agree on purchase deal - Update
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Published
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Wed, 24 Sep 2008 11:32
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Paris - Following months of negotiations, French energy giant Electricite de France (EDF) is to purchase British Energy Group after both boards agreed on a price, EDF said Wednesday in a statement. According to the agreed deal, EDF will pay 12.5 billion pounds (15.6 billion euros, or 22.9 billion dollars) for the group, which owns eight of Britain's 10 nuclear power reactors. The offer, equal to 774 pence per share of British Energy, represents a premium of more than 35 per cent over its closing middle price on March 14, when talks began between the two companies, and of nearly 7 per cent over Tuesday's closing middle price. While unions representing EDF workers are opposed to the deal, judging it too costly and risky, investors welcomed it, bidding up EDF shares by 5.44 per cent, to 52.88 euros in mid-morning trading on the Paris Bourse. The deal was also welcomed by British Prime Minister Gordon Brown, who called it "significant step towards the construction of a new generation of nuclear power stations."The British government, which has a 36-per-cent share in British Energy, is set to bank a multi-billion pound windfall from the deal and has been looking to upgrade its nucelar energy sector. "New nuclear is becoming a reality," Brown told Sky News television. In its statement, EDF said the takeover will enable it to become an active player in the British nuclear industry. It said it plans to build four EPR-type nuclear power stations in Britain. British Energy's power plants currently generate an estimated 14 per cent of the electricity supply in Britain. The two companies had been in talks since spring, but EDF's original offer of 765 pence per share was rejected by two investment funds that together controlled 22 per cent of the company. EDF has targeted Britain, China, the United States and South Africa as the four markets in which it is looking to expand its nuclear energy business.
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