EDF gets closer to British Energy takeover
Posted on: September 8th, 2008 by Jenson Brayshaw
The French energy giant, EDF has moved closer to getting rebel shareholders’ support to takeover British Energy with a £12 billion deal.
EDF’s earlier bid in July was rejected by British Energy’s two major shareholders, Invesco and M&G. Both are fund management companies. Invesco holds 15 percent stake of British Energy whereas M&G holds 7 percent. Out of these two, Invesco now seems to going in favour of EDF. The British government, holding a major share, is already in favour of EDF. Their combined stake of nearly 47 percent should prove sufficient to get the BE board’s acceptance to the takeover deal.
M&G, a part of Prudential Group, is still not happy with EDF’s offer. They are in favour of merging BE with the British company Centrica.
In July, EDF had offered 765p per share of BE, valuing the company at around £12 billion. BE’s shareholders could either encash their stake, or take 700p per share and a “contingent value right” or CVR. CVR is effectively a stake in company’s future profits. At that time, both Invesco and M&G had declined the offer.
It is now understood that EDF is considering hiking the cash offer a little bit and, more importantly, altering the terms of CVR which make it more attractive. These terms include altering the figures of likely future power output of BE and its income from selling electricity.
On the other hand, M&G is busy with its own analysis of merging BE with Centrica. According to them, it would lead to BE’s shares to get a value of 925p.
Going by industry sources, the matter should reach its conclusion within a fortnight.
Please visit www.edfenergy.com and www.british-energy.com for more details
