British Energy Auction Hits Stalemate
The auction of British Energy has been thrown into disarray after the nuclear power group rejected the only offer it has so far received, while EDF, the jilted suitor, signalled that it would not budge on price.
The board of British Energy told the French power group at the weekend that its bid, thought to have valued the company at around £11bn, was too low. The rejection leaves an auction, for which the Government held high hopes, at an impasse and could mean that the company will remain independent.
EDF is understood to have told British Energy that it does not intend to raise its offer. The company's best hope now appears to be RWE, the German power group, and Iberdrola, the ScottishPower-owner with whom it is working on a joint bid. The companies have yet to table a firm price but are understood to be still conducting due diligence. Suez, the only other company to have expressed a serious interest in British Energy, may take a closer look at the company but not until after it completes its merger with Gaz de France later this summer.
British Energy said that the "offers" it received did not reach its Friday share price close of 735p. "The board is clear that, in current circumstances, such proposals do not represent value for shareholders as they fail to take proper account of the current forward price of electricity and the value of the company's sites and people in the context of nuclear new build," the company said in a statement.
Recent press reports said that EDF had raised about £11.5bn in debt, which would allow it to pay about 724p per share for the company. Lakis Athanasiou, an analyst at Evolution Securities, said: "It would have been criminal for British Energy's board to recommend bids at this level."
The Government is hoping to pocket at least £4bn via its 35 per cent stake in the company. Amid rocketing electricity prices, several analysts have revamped their price targets for British Energy — Mr Athanasiou upped his price target to 935p — but EdF and other bidders are unwilling, at this point, to dig deeper. It is possible that the auction could now completely run aground.
"The board will continue to progress the opportunities available either through an offer for the company or other partnering arrangements which maximise the value of British Energy's participation in nuclear new build. It expects further discussions with interested parties," the company said.
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