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EDF agrees to buy British Energy EDF agrees to buy British Energy
(30 minutes later)
French energy firm EDF has agreed to buy British Energy, the firm which operates the UK's eight nuclear power plants, in a £12.5bn deal. French energy firm EDF has agreed to buy British Energy, the firm which operates eight UK nuclear power plants, in a £12.5bn deal.
In addition, British Gas owner Centrica is in talks with EDF to take 25% of all power generated by British Energy once it is in French hands. In addition, British Gas-owner Centrica said it is in talks with EDF to take 25% of all power generated by British Energy once it is in French hands.
It will also take a 25% stake in all new nuclear plants built by EDF.It will also take a 25% stake in all new nuclear plants built by EDF.
British Energy's power plants generate an estimated 14% of the electricity supply in the UK. British Energy power plants generate about 14% of UK energy supply, but many are due to be shut within 15 years.
BRITISH ENERGY'S NUCLEAR PLANTS TornessHartlepoolSizewell BDungeness BHinkley Point BHeysham 1Heysham 2Hunterston B EDF completes UK nuclear line-upBRITISH ENERGY'S NUCLEAR PLANTS TornessHartlepoolSizewell BDungeness BHinkley Point BHeysham 1Heysham 2Hunterston B EDF completes UK nuclear line-up
EDF's bid values British Energy at 774p a share, 9p more than a previous bid which was rejected. EDF's all-cash bid values British Energy at 774 pence a share, nine pence more than a previous bid which was rejected.
It has also proposed an alternative offer of 700 pence a share plus "one nuclear power note".
The note changes in value with wholesale energy prices and power output levels from British Energy's existing nuclear stations.
The French utility, which already supplies gas and electricity to more than five million customers in the UK, said it was committed to maintaining British Energy's headquarters in East Kilbride.
It said that British Energy staff in other locations, including Barnwood near Gloucester, would also benefit from the takeover.
Major coupMajor coup
British Energy said that its largest shareholder - Invesco - which had played an instrumental part in scuppering a deal at the beginning of August, had agreed to accept the sweetened offer.British Energy said that its largest shareholder - Invesco - which had played an instrumental part in scuppering a deal at the beginning of August, had agreed to accept the sweetened offer.
The British government, which owns a 36% stake in British Energy, welcomed the deal.The British government, which owns a 36% stake in British Energy, welcomed the deal.
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
It is a major step forward for its plans to revive the nuclear industry and reduce the UK's dependence on oil and coal for its energy needs.It is a major step forward for its plans to revive the nuclear industry and reduce the UK's dependence on oil and coal for its energy needs.
Prime Minister Gordon Brown said: "This deal is good value for the taxpayer and a significant step towards the construction of a new generation of nuclear stations to power the country."Prime Minister Gordon Brown said: "This deal is good value for the taxpayer and a significant step towards the construction of a new generation of nuclear stations to power the country."
EDF said plans for four new nuclear reactors were already in place, with the first to begin operating by the end of 2017.EDF said plans for four new nuclear reactors were already in place, with the first to begin operating by the end of 2017.
In addition, once the deal is completed, EDF has agreed to the government's request that it sell land to other nuclear operators to foster a competitive industry.
ControversialControversial
The deal is set to be controversial, BBC business editor Robert Peston says, because it will be seen by some as handing the UK's nuclear future to a company owned by the French state.The deal is set to be controversial, BBC business editor Robert Peston says, because it will be seen by some as handing the UK's nuclear future to a company owned by the French state.
Centrica's investment, which will cost it about £3bn, may placate some critics. But nuclear energy expert Malcolm Grimston told the BBC that it would be "a mistake" to see it as a French takeover.
"About 25 years ago, the supply of energy was organised along state lines, but now the industry is dominated by firms that operate across borders," he said.
Even so, Centrica's investment, which will cost it about £3bn, may placate some critics.
The deal with EDF is seen by Centrica as vital to reducing its dependence on imported gas.The deal with EDF is seen by Centrica as vital to reducing its dependence on imported gas.
EDF was set to buy British Energy in July this year, but the deal was called off on the eve of the announcement when shareholders protested that it was being sold too cheaply.EDF was set to buy British Energy in July this year, but the deal was called off on the eve of the announcement when shareholders protested that it was being sold too cheaply.