EDF completes takeover of British Energy
6th January 2009
French energy giant EDF has completed its £12.5 billion takeover of British Energy, the UK’s largest electricity generating company.
The deal was finalised yesterday following clearance by the European competition authorities in December and agreement to sell almost 80 per cent of shares in the nuclear operator to the French buyer.
The UK Government, British Energy’s largest shareholder, with a 36 per cent stake, welcomed the completion of the deal, claiming it would enable the UK to move further towards its ambition to become a low carbon economy.
"Given the challenge of climate change and energy security, it is right to embrace nuclear power as one of the technologies that can serve us in the future. Today's announcement marks an important step on the path to new nuclear power becoming a reality, ” said UK Energy and Climate Change Secretary Ed Miliband.
The Government will benefit from a £4.4 billion windfall from the sale of its stake held by its Nuclear Liabilities Fund. It said it would use the money to pay for the cost of decommissioning British Energy's existing nuclear power stations.
British Energy owns nuclear power stations at Dungeness, Hartlepool, Heysham, Hinkley Point, Hunterston, Torness and Sizewell.
Remaining shareholders in British Energy have until early February to sell up, when the company will be de-listed from the UK stock exchange.
EDF, which already holds a 17 per cent stake in British Energy, is completing its acquisition through Lake Acquisitions ltd. The takeover gives it a 96 per cent stake in British Energy.
The completion of the deal heralds the start of an investment programme into four new low carbon nuclear reactors in the UK by the French energy company. EDF expects the first new plant to be operational by 2017.
But the deal also comes with strings attached. EDF has had to agree with the European competition authorities to divest British Energy's coal fired power station at Eggborough and its gas fired power station at Sutton Bridge. It will also have to sell between five and 10 TWh of electricity on the open market between 2012 and 2015, and give up one of the three grid connection agreements that will be held by the combined EDF-British Energy group.
In addition, EDF has also agreed to sell one site potentially suitable for the construction and operation of new electricity production facilities adjacent to existing British Energy stations at either Heysham or Dungeness. It had already agreed to sell land at Wylfa and Bradwell.
Miliband said it was the UK Government’s ambition to have more than one firm building and operating nuclear power stations in the UK and is preparing to auction the sites at Wylfa and Bradwell, as well as a site at Oldbury in the West Midlands, to other operators.
“There are strong signals of interest in this from the power industry and we will continue to work with stakeholders to bring about the conditions that can make that possible,” he said.
Meanwhile, EDF is talking to potential partners to take stakes in its new nuclear power plants. It has been in talks with energy company Centrica about taking a 25 per cent stake in the new EDF-British Energy group that could potentially see the British Gas owner taking a stake in a new reactor.