Power firms prepare British Energy offers
Two European energy firms are thought to be putting the final touches to bids for Britain's up-for-sale nuclear power provider British Energy.
Spain's Iberdrola, which owns Scottish Power, and French nuclear giant EDF are expected to provide detailed offers to investment bank Rothschild, broker Charles Stanley said today.
The proposals could be between 600p and 700p a share, Charles Stanley said, which is at the lower end of analyst expectations and gives the company a market value of between £6.2 billion and £7.2 billion. The range is below the current share price of 720.5p.
Charles Stanley analyst Tina Cook said a full blown bid from British Gas owner Centrica was unlikely.
"Centrica, which earlier made an indicative offer of around 700p, is thought to be still scrambling around to find a partner interested in making a bid," she said. Reports have suggested the firm is looking to tie up with EDF in a deal that would give it access to some of BE's output.
Cook added that a bidding war between a range of suitors was unlikely with other potential candidates such as Germany's E.ON, French industrial giant Suez and Swedish power firm Vattenfall believed to have dropped out of the race. An offer of just under 700p a share from German industrial group RWE is also thought to be off the table amid concern from its shareholders the company might overpay, she added.
EDF, which is "largely considered the front runner" according to Ms Cook, operates 19 nuclear sites in France, where it supplies more than 80 per cent of the country's power needs. The group also has extensive operations across Europe, with UK arm EDF Energy boasting 5.1 million gas and electricity customers.
Iberdrola is the world's fourth-largest energy company and the biggest wind-generated power supplier.
British Energy operates all eight of Britain's nuclear power stations and should play a major role in the proposed development of the next generation of nuclear power supply.
It confirmed it was holding a series of takeover discussions in March this year, as the UK Government confirmed it was considering selling its 36 per cent stake in the business earlier this year. Last year the government sold a 25 per cent stake in the company for £2.08 billion.
British Energy has 6,000 staff and produces around one-sixth of the UK's electricity. Its eight nuclear power stations are Dungeness B in Kent, Hartlepool, Heysham 1 and 2 in Lancashire, Hinkley Point B in Somerset, Hunterston B in Ayrshire, Sizewell B in Suffolk and Torness in East Lothian. It also owns a coal-fired power station at Eggborough, East Yorkshire.
Image: Spanish energy giant Iberdrola is expected to submit an offer for British Energy