British Energy gets bid approaches, shares jump

LONDON Fri May 16, 2008 11:05pm BST

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LONDON (Reuters) - The UK's biggest electricity producer, British Energy BGY.L, said on Friday it has received several takeover proposals which value it at more than 10.8 billion pounds ($21 billion).

Sources briefed on the talks said the company is in contact with three parties: EDF (EDF.PA), a group made up of Germany's RWE (RWEG.DE) and Spain's Iberdrola (IBE.MC), and France's Suez LYOE.PA.

The nuclear generator had received just one offer, from EDF, by a deadline for second-round bids last Friday, said the sources. That bid was below 700 pence per share, they added.

However, RWE and Iberdrola have since expressed interest in making a joint bid, one of the sources said on Friday -- though no decision has been taken on whether to proceed with an offer.

Suez is also in talks with British Energy but the company is unlikely to bid as it has said it will not undertake such major deals until it has completed a merger with rival Gaz de France.

A source briefed on Suez's thinking said the company is more interested in taking part in UK power plant construction than in buying British Energy.

Hence it is pursuing a co-operation agreement with the UK generator, though it has not ruled out making an offer in a few months if the company has found no buyer, said the source.

The stock was up 5.2 percent at 715.5 pence per share at 1430 GMT.

British Energy said it had received proposals from several parties wishing to make a full offer for the company including the Nuclear Liabilities Fund, which represents the government's 35 percent stake. It did not identify the potential bidders.

British Energy, based in East Kilbride, Scotland, said the approaches are at an early stage and each requires several weeks of further development.

Suez said on May 6 it would not decide on major investments until its ongoing merger with rival Gaz de France GAZ.PA is complete.

"Suez made its position clear this month and the situation has not changed since," said the source briefed by Suez.

British Energy declined to comment. Its eight power plants, built since 1965, have been beset by corrosion and other technical problems in the past two years.

But the company is expected to be a key beneficiary of UK government plans to build more nuclear power plants to resolve a predicted electricity supply shortfall.

Despite concerns about storing nuclear waste and the cost of building the plants, the government is keen on power plants which do not emit large amounts of carbon dioxide.

That had sparked interest from some of Europe's biggest utility firms.

EDF STILL MOST SERIOUS BIDDER

Iberdrola, which owns Scottish Power in the UK, does not want to lead its own bid and RWE had not made an offer by last week's second-round deadline as its original partner, Vattenfall, had pulled out of the process.

The two are mulling a joint offer but no decision has yet been taken, said the sources.

British Energy's shares had declined 13 percent before Friday from a record 785p on April 25 because EDF -- which submitted its bid last week, according to a Reuters source -- was feared to be the only potential bidder.

"The board has reviewed the proposals and has decided that discussions should continue with all the parties concerned," said British Energy.

Both RWE and Germany's E.ON EONG.DE declined this week to comment on a possible takeover while reiterating they are interested in building nuclear power plants in the UK.

Centrica (CNA.L), the only British company previously thought to still be in the race, was not one of the parties which has made a bid, according to the Reuters source.

However, the Windsor-based power and gas supplier could yet team up with another bidder such as EDF and buy some power plants as it seeks to produce more of the power it needs for its millions of UK customers.

Suez said it had not submitted a bid for shares in British Energy. EDF, RWE and Iberdrola declined to comment.

(Editing by Quentin Bryar/Rory Channing/David Hulmes)

(chris.wills@thomsonreuters.com; 0044 (0)20 7542 5331; Reuters Messaging: chris.wills.reuters.com@reuters.net))

($1=.5138 Pound)

Keywords: BRITISHENERGY/

Keywords: BRITISHENERGY/

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