Centrica may be back in running for British Energy

04-08-2008

Centrica may be back in running for British Energy
British Gas owner Centrica is considering making an offer for British Energy following the collapse of talks between EDF and the nuclear power station operator, according to a report.

The Sunday Telegraph claims Centrica is mulling a £22 billion offer for the company, which has been up for auction since the government decided to sell its 36 per cent stake.

A "well-placed source" in Centrica told the Telegraph a possible offer will be discussed but the firm will wait to see whether EDF comes back with a higher offer.

The source added Centrica had proposed an all-share merger with British Energy at the beginning of the year but shareholders were holding out for a cash deal.

Centrica is likely to take the proposal to its biggest shareholders in the next few days during its post-results meetings.

French firm EDF walked away from the deal last week, amid reports the owners of British Energy wanted a higher price.

It is understood that EDF's 765p offer for British Energy was rejected by investors Invesco and M&G, which own 22 per cent of the firm between them, for being too low.

There are rumours EDF will return with an offer of 800p per share soon.

Another option would be for the government to break up British Energy, with different companies taking over each site.

British Energy owns and operates eight nuclear power station and one coal-fired station.

However, many of the sites are nearing the end of their lives and the government is keen to secure private investment to build a new generation of nuclear power stations.

The government could gain around £4 billion from a sale of British Energy.

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