British Energy bid war hopes wither

By John Bowker and Mathieu Robbins

LONDON (Reuters) - Hopes of a bidding war for nuclear power generator British Energy (BGY.L: Quote, Profile, Research) faded on Friday as sources said German utility RWE (RWEG.DE: Quote, Profile, Research) would not make a bid by the day's deadline, knocking over 3 percent off its shares.

When the UK government put its 35 percent stake in the firm up for sale, all Europe's most powerful utilities showed interest, but as the deadline looms, some have fallen away and none seems prepared to offer more than earlier indicative offers.

RWE (RWEG.DE: Quote, Profile, Research), which had considered an offer at less than 700 pence a share, will not bid on Friday, according to sources familiar with the matter.

However, they added that the firm could yet get involved at a later date. "RWE are not necessarily walking away," one of the sources said.

Shares in British Energy were down 2.2 percent at 699 pence at 12:42 p.m. on Friday, having earlier been as low as 685 pence, which would value the government's stake at just under 4 billion pounds.

Friday's deadline, the second such date for bidders to show their cards, is for formal offers with details of financing, said the sources, but these are not final binding bids and there may be a third round.

France's EDF will offer "substantially" less than 700 pence per share, according to another source familiar with the matter, and a separate source said Spain's Iberdrola (IBE.MC: Quote, Profile, Research) wanted to link up with a rival to bid, rather than make its own.

RWE, the owner of nPower, had previously been expected to team up with Sweden's Vattenfall VATN.UL, but the Swedish government has blocked the state-owned company's plans.