Approval for utility deals

13 November 2009

Electricité de France (EdF) has permission to take a controlling stake in a Belgian utility as well as to complete its deal with Centrica regarding British Energy.


After a European Commission ruling today, the giant French utility is able to complete deals to take a controlling stake in Segebel, a holding company for a 51% stake in Belgium's second-largest utility, SPE.


The 'attractively valued' £1.180 billion ($1.96 billion) stake is being sold by the UK's Centrica in order to complete an inter-dependent deal in which it will take 20% of the EdF company holding British Energy. The deal will include an element of swapping and will leave Centrica with cash for "balance sheet firepower," according to the company.


The two deals are inter-dependent and are set to complete at the same time on 26 November. Centrica will begin taking 20% of BE's uncontracted power production and will also go on to take the same stake in a joint venture for development of nuclear projects in Britain.


Centrica noted that it will enter the joint venture with EdF "to undertake the pre-development activities for a planned nuclear new build program, with the intention of constructing, operating and decommissioning four EPRs." The company has previously said it would take decisions on 20% stakes in new reactors on a case-by-case basis.


The European Commission decided that the change in control of SPE would not impede competition in Europe as long as EdF committed to immediately sell one of its two subsidiaries developing new fossil power plants in Belgium and to sell the other if it decides against the second project. EdF agreed to do this, and the EC has ruled that "there is no need" for Belgian competition authorities to look into the deals as they had requested.


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