Talks still on over Centrica BE stake

17 April 2009

Centrica has confirmed it is still in discussions on taking on an equity stake in British Energy (BE), possibly including an asset swap with BE owner Electricité de France (EDF).
 
UK-based power company Centrica owns major UK gas and electricity supplier British Gas. Its UK electricity generation interests include seven gas-fired power stations and major contracts from other suppliers. Its European interests include a 51% stake in Belgian generation and supply company SPE.

 

Centrica's Langage CCGT project: nuclear new-build next? (Image: Centrica)

Centrica has long shown an interest in diversifying its power generation interests and signed a non-binding memorandum of understanding to take a 25% interest in the EDF subsidiary which purchased BE, in September 2008. As well as giving Centrica an interest in the UK's existing nuclear capacity, such a deal would also ensure it a toehold in the country's much-vaunted nuclear new build plans, as EDF plans to build new reactors at some of its UK sites. Centrica launched a share offer in November 2008 to raise £2.2 billion ($3.5 billion) towards the purchase.
 
Now Centrica says that the ongoing discussions extend to the possible sale of its SPE interest to EDF. Some commentators have suggested that such an asset swap could be beneficial to both EDF and Centrica, giving EDF scope for expansion into Belgium and the Netherlands, and may indeed be Centrica's only hope for the deal to go through in the current economic climate with energy asset prices falling since negotiations began.
 
The companies expect discussions to be concluded within the next few weeks. Reports in the UK media claim that EDF has already made steps towards carrying out due diligence on SPE, but Centrica warns that there is "no certainty" that any agreement will be reached.
 

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