British Energy linked to RWE offer

Nuclear power station operator British Energy was today said to be weighing up an £11bn (€13.7bn) takeover approach from German utility business RWE.

The company – which confirmed talks about a possible takeover or merger in March – has allowed RWE access to its books, the Financial Times reported.

British Energy operates all eight 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 plants.

But RWE’s all-cash indicative offer may face competition from French energy firm EDF as well as British Gas owner Centrica, which could team up with another player for a possible bid.

The UK government owns a 35% stake in British Energy and could make up to £4bn (€4.9bn) if RWE's proposal is accepted.

EDF is said to be interested in buying only part of the business but may be forced into making an offer for the whole firm if RWE goes ahead with its bid.

RWE, which owns UK power company E.On, is also considered to have the financial firepower to make such a move as its £4bn (€4.9bn) debt is only three times last year’s operating profits.

Centrica – seen as a likely bid partner to ease Government concerns over BE falling into foreign hands – has submitted an all-share offer but this is unlikely to find favour with the company’s board, the FT says.

British Energy, which has around 6,000 staff and produces around one-sixth of the UK’s electricity, was unavailable for comment.

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.

In a brief update which made no mention of the possible offer, the firm said its nuclear output for the year to March 31 was marginally ahead of expectations at 50.3 terrawatt hours (TWh).

But the company added that it expects higher than than expected output losses this year from refuelling operations due to delays at Dungeness.