Centrica issues British Energy statement

Robin Pagnamenta and Siobhan Kennedy

The Takeover Panel has intervened in the row over the future of British Energy, forcing Centrica to issue a statement clarifying its position over a possible £22 billion merger with the nuclear generator.
The was also speculation yesterday that Centrica had resumed discussions about an all-share merger with British Energy after talks about a French-backed takeover of the group, in which Centrica had hoped to play a junior role, stalled last week.
Centrica's statement yesterday said that it would consider a number of other alternatives with respect to British Energy, if the proposed £12 billion takeover by EDF, the electricity group 84 per cent controlled by the French State, did not succeed.
“These alternatives may include proposing to British Energy: long-term power off-take arrangements, Centrica participating in British Energy's potential new nuclear partnerships or a possible merger of Centrica with British Energy, only if terms could be agreed and if all parties are fully supportive.”

The statement also emphasised that no direct talks with British Energy, which is 35 per cent owned by the Government, about a possible merger were taking place. Under Takeover Panel rules, companies can be forced to declare their position if speculation regarding possible corporate activity is thought to be at risk of distorting the market.
A widely expected takeover by EDF, the world's largest nuclear generator, was called off at the eleventh hour last week after two key shareholders in the British company demanded a higher valuation than the 765p per share on offer. They were also critical of the structure of the deal, which included a “contingent value rights” component designed to give them the chance to benefit from future success of the energy group.
It remains unclear if EDF will be willing to raise its offer, but the Government indicated yesterday that its preferred option for British Energy remained a takeover led by EDF. “The Secretary of State said on Friday the EDF deal would have been a good fit. That remains our view and the parties are still in discussion. Our clear preference is for a business with experience of new nuclear build,” a Department for Business spokesman said.
Centrica had proposed the idea of an all-share merger with British Energy earlier in the year, but shareholders had indicated that they would prefer a cash deal.
The Government wants the use the sale of British Energy, which owns most of the best sites, as an opportunity to kickstart the construction of a new generation of nuclear power stations.