British Energy in talks with potential investors

17 March 2008

British Energy (BE) has acknowledged it is in talks regarding a takeover or merger of the company, as the UK government hired a financial advisor for its nuclear vision.


A statement issued today in line with regulations said BE, the UK's biggest nuclear energy generator, was "in discussions with interested parties in the context of its future and its plans to take a pivotal role in any new nuclear program." In this context 'interested' is an official term meaning negotiations over at least 1% of BE have begun.


The company added: "These discussions could lead to a business combination or an offer for the company, although there can be no certainty that any offer will be made."


European utilities EOn, RWE, Electricité de France and Iberdrola as well as the UK's Centrica have reportedly been approached to see if they are interested in acquiring a stake in BE. Because its holds the most likely sites for new nuclear build, BE has been talking to every company interested in new nuclear power in the UK. It is also running its own design analysis of the four potential reactors for build in the UK: Atomic Energy of Canada's ACR-1000, Areva's EPR, GE-Hitachi's ESBWR and Westinghouse's AP1000.


In June 2007, the UK government reduced its stake in BE to 35.2%, liberating funds it sunk into saving the company for use in long-term radioactive waste management. A statement from the Department for Business, Enterprise and Regulatory Reform (Berr) said "the government is keeping its stake in British Energy under review."


Berr also said it had hired financial services firm UBS to "advise the government on commerical and financial aspects of the strong and growing interest in nuclear new build in the UK," adding that "this may include advice on any proposals coming forward from British Energy following the company's call for new build partners."


Berr told Bloomberg that UBS is "not touting" the government's stake in BE, while the Financial Times said that under takeover rules, any company buying the whole of the government's stake would automatically be forced to make a full takeover bid for BE.