EDF completes £12.5bn takeover of British Energy
Tuesday 06 January 2009
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| Taking over British Energy, EDF gains prime sites for new nuclear power plants, such as this one at Sizewell in Suffolk |
EDF Energy completed its £12.5 billion takeover of nuclear operator British Energy yesterday, following clearance of the deal by EU competition authorities last month.
The acquisition will hand the UK government a £4.4 billion windfall for the 35.5% stake held by its Nuclear Liabilities Fund.
Welcoming the completion of the deal, the government said this windfall would be used to fund nuclear clean-up costs for old nuclear power plants being decommissioned.
EDF said yesterday that its acquisition vehicle for the deal, called Lake Acquisitions Ltd, would now apply to de-list British Energy from the UK stock exchange. This could take place as early as next month, giving remaining shareholders until February 5 to sell up.
The sale is taking place based on a share price of 148 pence.
In a press statement, the French electricity company confirmed that shareholders representing 79.38% of British Energy have agreed to sell.
As well as the state-owned stake, this included a 12% stake owned by pensions fund Invesco. EDF had already held a 17% stake in British Energy - giving EDF 96% ownership of the UK nuclear operator.
The company said: "As at 1.00 p.m. (London time) on 5 January 2009, Lake Acquisitions owned or had received valid acceptances of the Ordinary Offer and the Convertible Offer in respect of a total of 1,550,102,522 British Energy Shares, representing in aggregate approximately 96.44 per cent. of the current issued share capital of British Energy."
Conditions
EDF will have to sell British Energy's Eggborough coal plant, a facility that can also use biomass to generate energy
The company, which employs 6,000 people, also owns the 1.9GW Eggborough coal power station in East Yorkshire, but will have to sell this plant in order to keep competition authorities happy.
Other conditions attached to the deal by competition authorities include the sale of the 790MW EDF gas-fired power station at Sutton Bridge in Lincolnshire.
EDF must sell between five and 10 terra-watt hours (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.
And, although EDF is aiming to use British Energy's existing nuclear sites to host up to four new nuclear power stations as older facilities close, it has agreed to sell off land next to one of its nuclear sites at either Heysham, Lancashire, or in Dungeness, Kent.
EDF has previously agreed to sell land at Wylfa, Anglesey, and at Bradwell in Essex.
The sale of sites was required because sites of existing nuclear power stations are seen as most preferable for locating new nuclear plants, with competition authorities keen to ensure companies other than EDF can compete.
Welcome
Last night saw government ministers welcoming the completion of the British Energy takeover. It said climate change has made the growth of new nuclear power "more pressing", and the EDF takeover would help the UK move further towards becoming a low carbon economy.
Noting the conditions of the sale, Energy and Climate Change Secretary Ed Miliband said: "In addition to the important investment made by EDF, our ambition is to have more than one firm building and operating nuclear power stations in the UK.
"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."
Business secretary Lord Mandelson added: "Completion of this takeover represents not only a £12.5 billion investment in the UK by EDF but, in opening the way for new nuclear build, should provide many billions of pounds more opportunity for the UK supply chain."
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