Power giant 'could bid for British Energy'

Swedish power giant Vattenfall is reported to be considering joining the race for British Energy. The state-owned firm is said to have appointed investment bank Citigroup to look into the benefits of a possible bid, according to the Sunday Telegraph.

If Vattenfall does decide to table a bid it will be competing with other European energy giants such as the French firm EDF Energy and Germany's RWE.

Vattenfall is Europe's fifth largest electricity generator and it already has operations in Denmark, Finland, Germany and Poland, as well as owning the Kentish Flats offshore wind farm in the UK.

The Government sold a 25 per cent stake in British Energy last year, raising £2.08 billion, and it is now considering selling its remaining 35 per cent stake in the group.

British Energy operates all of Britain's nuclear power stations and is expected to play a major role in the proposed development of the next generation of nuclear power supply.

Meanwhile speculation continued as to whether British Gas owner Centrica would team up with another firm to bid for British Energy.

It is thought Centrica would have been keen to bid on its own, but it has been held back by a lack of financial firepower and declining share price.

Instead, it is understood to have been approached by European firms, including EDF and RWE, who hope Centrica's involvement will water down criticisms of strategic industries going to foreign owners.

The Sunday Telegraph today said people close to Centrica had reported it was more likely to pursue a bid with EDF. However, the Observer claimed the firm was in danger of being frozen out of the process altogether. It said EDF and RWE did not need to team up with Centrica and planned to proceed on their own.

It added that the firms were understood to be concerned that involving the British Gas owner could trigger competition issues because the group is already the UK's largest energy supplier and owns its own power plants.

RWE has already tabled an indicative offer for British Energy, which is understood to value the group at around £11 billion.

It is thought EDF will table its offer soon, although the French firm is thought to be cautious about overpaying for the group and it is understood to think a bid in the region of £9.4 billion is a more realistic price.

Both EDF and RWE are also expected to open talks with the Nuclear Decommissioning Authority this week over buying land adjoining three nuclear power stations, according to the Mail on Sunday.

It is thought that while the land in question is farm land, it could prove to be valuable if it is sold with permission to build a nuclear power station on it.

A Centrica spokesman declined to comment on the speculation and none of the other companies could be contacted.

Image: Swedish power firm Vattenfall is reportedly considering a bid for British Energy

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