UK government bars Centrica’s bid for British Energy

According to an institutional shareholder in Centrica, the nuclear generator has been banned from making a single-handed bid for British Energy by the British government.

Published reports say that the shareholder in question has raised concerns as to why EDF, which is the favored bidder, enjoys the overwhelming support of the UK government. He added that a combination which includes Centrica and British Energy would be more amicable for shareholders since a higher bidding price was foreseeable; they would also be able to retain their shares in the merged company.

However, the shareholder who maintains his anonymity, said that Centrica is not able to go forward due to the government has put a damper on its bidding prospects.

Merger talks by French firm EDF, spearheaded by Vincent de Rivaz in Britain, and British Energy are ongoing. At the start of August, a £10 billion all cash deal by the two firms was almost finalized. That was equivalent to 765 pence per share. However, BE’s two top institutional shareholders Invesco and M&G, who own approximately 22 percent of the firm turned down the deal in the last minute. The shareholders pronounced the deal as being too low. They also claimed that a bid close to £10 was a justifiable price, taking into account the rise in energy prices.

Just last week, John Hutton, the Secretary of State for Business, asserted the British government’s support for a deal between British Energy and EDF. Incidentally, the government has a 35% stake in the energy firm.

Please visit www.centrica.co.uk, www.edfenergy.com and www.british-energy.com for more details