Two major shareholders in British Energy are understood to have vetoed the £12
billion bid by French energy giant EDF which threw the Government's nuclear
programme into chaos last night.
A source said the deal had foundered when at least two of British Energy's key
private investors held out for a higher price. The shareholders argued that
EDF's bid had been overtaken by rising fuel prices and should be increased.
A source declined to confirm a rumour that Invesco and Prudential, which
collectively own 22 per cent of British Energy, were the shareholders which
blocked the deal.
The French state electricity supplier is understood to remain keen to win over
British Energy's board. It is expected talks will continue and that the
takeover had been postponed but not abandoned.
At a press conference, Pierre Gadonneix, EDF's chairman and chief executive
said: 'After extensive discussions and listening to the demands of the
different parties, we believe that the financial conditions for a major
development of EDF in Great Britain are not right today.
'The trend towards nuclear power is being confirmed in certain countries,
notably the UK. It is a subject in which EDF plans to have a leading
position.'
Mr Gaddoneix effectively ruled out a hostile bid for British Energy when he
said EDF would only invest 'in a country where it was welcome'
Invesco is British Energy's leading shareholder and owns almost 15 per cent of
the company while Prudential has 7.2 per cent. Deutsche Bank owns a 7.56 per
cent stake.
EDF, which walked away from takeover talks in the early hours of this morning,
is understood to have proposed two offers: a 765p cash bid or 700p in cash
plus further payments based on performance.
The options were put to British Energy’s board late on Thursday, but were
rejected. Shares in British Energy fell 5.89 per cent, or 43p, to 686.5p in
early trading.
The group said this morning that conditions allowing for a “major development”
in the UK were “not met”. It had been widely expected to announce a bid for
British Energy this morning after months of talks.
British Energy held talks with several energy companies earlier this year,
including RWE of Germany, Iberdrola of Spain and Vattenfall of Sweden, but
EDF became the frontrunner to buy the group after making an offer of 680p a
share in May.
This was rejected as too low, but the two sides continued talking.
Shortly before midnight last night EDF released a statement saying that
conditions were not right for “a major development in Great Britain”.
EDF were keen to stress last night that while talks over a full bid for
British Energy had collapsed, it could be interested in other UK nuclear
deals in future.
A source close to the talks said: "EDF's interest in the industry in the
UK pre-dates discussions with British Energy. We have other options but are
still interested in discussion with BE."
The takeover of British Energy, which operates eight ageing nuclear power
stations and produces one sixth of Britain’s electricity, was seen as
critical to the Government’s plans to replace the country’s reactors. It
owns 35 per cent of British Energy. EDF had proposed building four nuclear
power stations using French technology.
Centrica, the owner of British Gas, had also been expected to take part in the
deal by acquiring a 25 per cent stake in British Energy from EDF.
The surprise announcement by EDF — it had been reported earlier in the evening
that its board had agreed the deal — leaves the Government facing the
prospect of its nuclear plans being delayed by years.
A government source said last night that British Energy emerged from a board
meeting to say that the deal was off. Another source close to the deal said
that the company had last-minute reservations about the terms.
The Government had pinned its hopes on the sale as a way of encouraging a
building programme to replace ageing reactors. Many of its nuclear and other
power plants are due to be retired from service.
If the deal cannot be revived with EDF, or another bidder be persuaded to
enter the frame then the Government could be forced to create a series of
smaller deals to build individual stations, which is likely to be highly
complicated, expensive and drawn-out. John Hutton, the Business Secretary,
said in March that nuclear power could be Britain’s biggest energy asset
since North Sea oil and gas.
The Department for Business, Enterprise and Regulatory Reform had said last
night that it was “watching events closely”, adding that the Government’s
commitment to nuclear power was unswerving.
A spokeswoman said: “Our commitment to nuclear power is clear. The go-ahead
for new nuclear power, alongside our action to promote energy saving and
renewables is in Britain’s long-term national interest.
“The level of interest in nuclear new build remains high and recent months
have shown there are strong signals of an appetite for this from the market.
Recent developments in energy markets underline the need for nuclear build
to combat high fossil fuel prices, climate change and security of supply.
Peter Luff, the chairman of the Commons Business and Enterprise Select
Committee, said last week that the expected takeover threatened to reduce
price transparency in the electricity market and create an overly dominant
player that would add to upward pressure on prices paid by consumers.
British Energy operates one coal-fired and eight ageing nuclear power
stations, including Hinkley Point, Torness and Dungeness. EDF had been the
only bidder to have submitted a serious offer before the May deadline. EDF
said last night: “After in-depth discussions, EDF considers that the
conditions for a major development in Great Britain are not met to date.” It
is due to hold a press conference in Paris this morning.
Since Britain’s current nuclear reactors were built in the 1960s and 1970s, it
has lost many of the high-end engineering skills needed to replace the fleet
— a complex project. French expertise was thought, therefore, to be
essential to train a new generation of British nuclear engineers and to help
them to build and run the new plants.
When the deal was in the offing it was presented as a huge bonanza for the
French nuclear industry, which is also angling to win similar contracts in
other countries considering new-build nuclear programmes, including South
Africa and China.
A statement released by The Department for Business, Enterprise &
Regulatory Reform said: Our commitment to nuclear power is clear. The go
ahead for new nuclear power, alongside our action to promote energy saving
and renewables is in Britain's long term national interest.
"The level of interest in nuclear new build remains high and recent
months have shown there are strong signals of an appetite for this from the
market. Recent developments in energy markets underline the need for new
nuclear to combat high fossil fuel prices, climate change and security of
supply."
We need nuclear energy like a hole in the head. Its very expensive & polluting, the plants & waste have to buried for ten thousand years because of radiation. Yet we could supply 200% - 300% of UK needs with Ocean current & Tidal power as we have the everest of tides that run 24/7 & 100% efficient
Jas, Alders , UK
Where are the regulators in all this?
In my innocence I believed that they are the body who are looking after the interests of the public. Surely they should have known about the crisis before us?
Yet when push comes to shove the power companies who are making the running and they sitting back
Steve, Billericay,
The Uk government must stop with the 'micky mouse' alternative energy nonsense.
We need nuclear power staions to be built now. This is nothing less than a national priority.
Petr Lewin, Northwood, UK
Now perhaps the government will begin to invest seriously in micro-generation. Time is running out before the lights go out.
sheila, Leicester,
Holding our for a few more pieces of silver for the eventual betaryal of the national interest does not impress. What these shareholders should do is demand a British solution with British ownership. Anything else would have been unthinkable not long ago. Now it is "How may we help you, EU friends?"
D.L. Stephens, York, England
At the moment France supplies 20% of our electricity (nuclear power) and we are most grateful. They can turn it off when they feel like it, so watch out his winter. Britain shouldn't be thinking of building a new nuclear power station, they should be buildin 12 right now, why wait?
m wilson, bidache, france
What are the chances that the government will offer to buy out the dissnting shareholders ?
CHARLES, EXETER, U.K.
I echo Jerry.The price of electricity from EDF for our home in France has risen by 1.15% in the last year.Over the same period,electricity from the same supplier has risen by 7x this amount for our home in the UK.Why is a foreign state owned country providing our electricity anyway?
Andrew, Bristol, UK
We should decommission our nuclear submarines and use their reactors for peaceful electricity production.
Colin Soames, London,
I think Rolls Royce should make out nuclear plants --- they've already been building them for decades. And as Labour has reduced the Astute submarine programme from 8 to 6, they should be offered the opportunity.
...and they are British.
Phil, Preston,
Why anyone in the UK would want the French tax payer to own our Nuclear power stations beggars believe! The government should start playing the EU game properly and sate that this is illegal as EDF is not a fully private company.
Will, Southampton,
Nuclear power is dangerous! Chernobyl ? Don't think it is impossible for it to happen here! Also ,Three Mile Island,Windscale & more.The French are having contamination problems and we are about to let them take over here! A major rethink is necessary in the way we use energy .
gerry, merseyside, uk
For years now governments of every political persuation have let this country down by letting our engineering base fritter away and becoming more and more dependent on foreign companies to provide expertise.
Rodney Moore, Preston,
Expect massive power cuts - the French were our only hope of keeping the lights on.
We do not have the expertise top build power stations, aside from the total disarray of our licensing and decision making processes.
David Martin, Bristol,
We had our chance but allowed all the anti nuclear protestors to dictate our energy policy helped by gutless politicians and loony environmentalists,we will reap the cost of our lack of foresight.The french being far more pragmatic turned out standard nuclear plants like volkswagens!
Cliff Thompson, Barking, England
Again the fact EDF is 85% owned by the French goverment demostrates that they take energy a lot more serious than the UK goverment.We leave buisness and domestic customers to fight it out on price in the open market while the rest of Europe has a protected price.Should they be like us?
william, portsmouth,
I have a house in France, and EDF supply my electricity. In March 2005 the cost of a kWh was €0.0765 (0.61p). On my July bill the cost is €0.0787 (0.63p) - a percentage increase of less than 3% over 3 years. The problem is not EDF, but the whole structure in the UK.
Jerry, Southampton, England
There's no doubt about Nuclear energy in Scotland - the government there has said there won't be any.
This is an English problem, not a British.
John, London, England
and our B-loved mr berluskony told, to the entire world, just a couple of weeks ago: 'let's make 1.000 brand new nuclear power plants all over the planete'.
what I call....Timing....
edoardo chioni, Rome, ITALY
Yes open the Coal mines, nationalise energy, kick start an immmediate programme to train Nuclear scientists, bring the old ones out of the pub, pay them a shed load, get the things built. But never ever sell you basic energy or water to a foreign power. Windfall tax the ones making a mint now .
John , Wolverhampton,
Why is ownership of BE being confused with building nuclear power stations. Put the new power stations out to bid like any other project. There is nuclear expertise in the US and Japan as well as France - and these are all foreign countries, EU or no EU.
jon livesey, Sunnyvale, CA/USA
If this short-sighted government had not allowed Westinghouse (the nuclear reactor manufacturer once owned by BNFL) to be sold off, then we might have the capability to do something ourselves for a change! The government is only interested in the money to prop up its ailing finances.
Steven Ramsay, Knottingley, U.K.
I live in Italy where VODAFONE is one of the major telephone companies and RYANAIR is probably the major low-cost airline. British and Irish should stop saying that the EU is only helping other countries to invest in Britain and not vice-versa.
Horace, Florence, Tuscany, Italy, EU
This is not the first time an anglo-french nuclear agreement has collapsed. It happened before in 1974 when Wedgie-Benn chose the dreaded AGR against a GEGB-Framatome deal to build PWRs.
France is now a world leader with the PWR.
More coal seems likely, with a 'carbon-capture' dodgy promise!
John Gregory Flinn, Béalencourt, France
Oh well, with a bit of luck they'll be a lot of out of work Iranian nuclear technicians soon.
Ned Gibbons, Stroud,
EDF haven't they just increased the price of GAS and ELECTRICITY? Labour is partially responsible the price hikes we are seeing, they should zero rate VAT on all fuel.
steve tea, manchester, cheshire
The Gov't goes along with everything in the EU, whilst others don't.
Why not more hard-nosed business attitude as in in the private sector?
The UK gov'ts always accept pressure - but we won't mention the Saudi arms deal, will we?
Padraig, Perth, Australia
France is not a foreign country, at least no more foreign than Wales or Scotland. France is a neighbour and part of the Union.
We are lucky to have France as a partner in this venture as in many grand projects, because France believes in R&D and is prepared to invest in industry.
../
Peter GODDARD, Le Rouret, France, EU
EdF are currently buying large tracts of land adjacent to Wylfa nuclear power station (a site owned by the UK government not British Energy) - and they paying hugely above the going rate for the priviledge. So perhaps Wylfa will become the first of the next generation UK nuclear power stations?
Mike Griffiths, Anglesey, UK
The French Government will 'not allow' any majority foreign ownership of any of it's 'National' industries, whether it be major banks, utilities or industrial. This is contrary to the rules of the EU on free trade. But, as usual, the French only obey the rules when it suites them. Leave the EU now.
paul, birmingham, uk
We should use renewable energy where possible. It has shown to be quite feasible to grow and harvest crops; to use wind, wave, tidal and solar energy. Old housing should be slowly knocked down; replaced with detached solar gain housing. We don't need nuclear facillities!
John Clarkson, Camborne, Cornwall
I too am glad that EDF have pulled out- they already have us over a barrel with electricity costs. How can our government even consider foreign ownership. In the event of future shortages they would direct the power through the interconnector cable back to France.
Jean, Oundle
Jean Crookes, Oundle, Northants
Are British companies allowed to invest and own any major French or German power generator? I think not, a one sided free trade agreement brought to you by the EU.
Ian Bryan, Reading, England
I'm glad EDF don't want the contract. It should be Brtish. Why has the country let it's engineers down consistently? Invest in British engineers. Pay them a proper salary, encourage people to study sciences not media studies and other such rubbish. It's unbelievable we can't do it ourselves.
Chris, Banbury,
Our energy should be kept British anyway.
Matt, Naples, Italy
If every energy company makes £1Billion profit a year, it will take EDF 12 years to repay the money for buying British Energy. In the meantime expect vast energy rises every year from all these companies. They pay this money only to charge their customers to pay for it
emma, Brighton, uk
The French are taking the British public for a ride and subsidisng their own citizens with the exorbitant charges levied on us. Yesterday's massive hike would be nothing if the nuclear energy programme ended up in EDF's hands. Let's build or own and keep what we own!
Ian Dickson, Brighton, UK
Another example of where we once led the world in technology because of the short sighted anti nuclear lobby we are having to go cap in hand to the French and others to bail us out. We should develop our own expertise and not act like a non technical nation.
Brian Girling, Fareham, UK
I'm not quite sure how I feel about this. My initial reaction is one of relief that yet more of our utilities are not (yet) going to fall into foreign hands. Time to reopen the coal mines ????
Carol, Leicester, UK