British Energy bidding war hopes recede

Thursday, May 1, 2008

Hopes of a bidding war for British Energy were dealt a blow yesterday after it became clear that Vattenfall, Suez and Eon were not planning to bid for the UK nuclear group.

This leaves RWE of Germany and France's EDF as the most likely bidders for the UK government's 35 per cent stake in British Energy before the deadline of Friday, May 9. Both companies - which have power generation operations in the UK - declined to comment.

Buying this stake could trigger a full takeover of the company, which at a closing price of 760p is valued at about £12.2bn ($24bn).

Several of Europe's largest energy companies have been in talks with British Energy, which, as well as being the UK's largest generator of electricity, owns the best sites for building new nuclear reactors in the UK. But many of the companies either ruled themselves out or said they would not overpay for the British Energy stake, making a bidding war less likely.

Vattenfall, the Swedish state-owned energy company, had been talking to British Energy but decided earlier this week not to pursue a bid. This came after the Swedish government expressed fears that a bid would contradict its policy of phasing out nuclear power.

Officials for Fredrik Reinfeldt, Sweden's prime minister, and Maud Olofsson, energy minister, declined to comment, although others who asked not to be named confirmed the doubts.

Vattenfall is run as a commercial company with an independent board but is wholly government-owned.

The group remains keen to expand into the UK power market and is looking at the possibility of building new nuclear plants on sites owned by the Nuclear Decommissioning Authority, the UK government body responsible for shutting down and cleaning up the country's oldest reactors.

Lars Josefsson, Vattenfall's chief executive, said he wanted to expand the company geographically and made clear when the company announced first quarter results on Tuesday that he was "interested" in the UK market.

Suez, the Franco-Belgian utility and Eon of Germany have also been in talks with British Energy for some time, but people close to both companies played down expectations that they would submit bids.

Suez is concentrating on completing its merger with Gaz de France. A person close to the group said it was "not Suez's style" to get involved in auctions for assets or bidding wars.

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