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Doubt over nuclear takeover bid British Energy rejects takeover
(29 minutes later)
A deal that would have involved the sale of most of the UK's nuclear power stations to a French state-owned energy firm now appears uncertain. The board of British Energy has rejected a deal which would have meant the sale of eight of the UK's nuclear power stations to a French state-owned energy firm.
EDF had been expected to announce a £12bn deal to buy British Energy, which owns eight reactors in the UK. EDF had been expected to announce a £12bn deal to buy British Energy.
However, EDF put out a statement saying conditions were not right for it to proceed with the deal. However, it is understood that shareholders argued that the soaring price of energy meant they should be able to command a higher offer.
The rejection is a major setback to the UK's plans to cut greenhouse gases.
The government holds a 35% stake in British Energy and is believed to have backed the deal.
The deal would have raised as much as £4bn for the chancellor.
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The BBC's Business Editor Robert Peston says although the deal could yet be revived, the latest development is bound to be a disappointment for the government which wants to get the building of new nuclear power stations under way as soon as possible to replace the ageing Magnox reactors.
Nuclear future
In a statement, the Department of Business, Enterprise and Regulatory Reform said that it would continue to watch developments closely, but closing the deal was a matter for the private sector.
The level of interest in nuclear new build remains high...there are strong signals of an appetite for this from the market Department for Business spokesman
But it reaffirmed the UK government's commitment to nuclear power, and it said that the rise in oil prices had only made the case for new nuclear plants even stronger.
Both companies issued terse statements about the breakdown of the talks.
EDF said that conditions were not right for it to proceed with the deal.
British Energy said "advanced discussions" had continued but that no agreement had been made to date.British Energy said "advanced discussions" had continued but that no agreement had been made to date.
It added that there could be no certainty that the talks would lead to an offer being made.It added that there could be no certainty that the talks would lead to an offer being made.
British Energy's nuclear power stations are seen as some of the best sites for new reactors in the UK.
Government stakeGovernment stake
EDF, which is 85% owned by the French government, is the biggest nuclear power generator in the world.EDF, which is 85% owned by the French government, is the biggest nuclear power generator in the world.
"After in-depth discussions, EDF considers that the conditions for a major development in Great Britain are not met to date," the Paris-based company said in a statement."After in-depth discussions, EDF considers that the conditions for a major development in Great Britain are not met to date," the Paris-based company said in a statement.
No indication was given as to what provoked the decision.
A spokesman for EDF in Paris would not comment on whether the deal was off or just delayed.
The announcement came shortly before the firm was due to release its half-year earnings.The announcement came shortly before the firm was due to release its half-year earnings.
The level of interest in nuclear new build remains high...there are strong signals of an appetite for this from the market Department for Business spokesman
British Energy, which generates about 20% of the UK's electricity, is part-owned by the British government which wants to sell its stake.British Energy, which generates about 20% of the UK's electricity, is part-owned by the British government which wants to sell its stake.
The firm was privatised in 1996 but ended up being bailed out in 2002 by the government after running into severe financial difficulties.The firm was privatised in 1996 but ended up being bailed out in 2002 by the government after running into severe financial difficulties.
It is 35%-owned by the government, and the deal would have raise as much as £4bn for the chancellor.
Centrica was negotiating with EDF to be its minority partner in the acquisition, and was expected to pay around £3bn for a 25% stake.Centrica was negotiating with EDF to be its minority partner in the acquisition, and was expected to pay around £3bn for a 25% stake.
'Interest high''Interest high'
British Energy's sites are considered prime locations for the government's proposed new generation of nuclear power plants.British Energy's sites are considered prime locations for the government's proposed new generation of nuclear power plants.
EDF has other options for developing nuclear facilities in the UK, having bought land adjacent to two existing nuclear plants.EDF has other options for developing nuclear facilities in the UK, having bought land adjacent to two existing nuclear plants.
A spokesman for the Department for Business, Enterprise & Regulatory Reform said: "Our commitment to nuclear power is clear.A spokesman for the Department for Business, Enterprise & Regulatory Reform said: "Our commitment to nuclear power is clear.
"The go ahead for new nuclear power, alongside our action to promote energy saving and renewables is in Britain's long term national interest."The go ahead for new nuclear power, alongside our action to promote energy saving and renewables is in Britain's long term national interest.
"The level of interest in nuclear new build remains high and recent months have shown there are strong signals of an appetite for this from the market.""The level of interest in nuclear new build remains high and recent months have shown there are strong signals of an appetite for this from the market."
The BBC's Nils Blythe says although the deal could yet be revived, the latest development is a setback for the government which wants to get the building of new nuclear power stations under way as soon as possible.