France's Edf announces British Energy buyout plan

PARIS—French power giant EdF said Wednesday it has agreed to acquire British BritishGroup PLC in a cash offer valued at 12.5 billion pounds ($23.18 billion), creating a cross-Channel powerhouse in nuclear energy.

EdF's bid of 774 pence for every ordinary share of the British nuclear power plant operator amounts to an increase of nine pence per share from the bid that French company made in July -- but was rejected by British Energy.

The deal for Britain's biggest electricity producer would give the combined company extra heft in nuclear power: EdF is the world's largest nuclear plant operator, running all 58 of France's nuclear reactors.

French state-controlled EdF said in a statement that the companies' administrative boards had reached a deal on the offer to be made by Lake Acquisitions Limited -- a fully owned subsidiary of EdF.

Also Wednesday, Centrica PLC, Britain's largest energy supplier, said it is in talks with EdF about an option for Centrica to buy 25 percent of Lake Acquisitions after the EdF-British Energy deal is completed. Centrica said it would be at the "same implied price" as that paid by EdF for British Energy -- or 774 pence a share.

In Paris trading on Wednesday, shares of EdF rose 5.42 percent to euro52.87 ($77.88). In London, shares of British Energy climbed 6.2 percent to 769 pence ($14.29). Shares of Centrica rose 2.79 percent to 328.79 pence ($6.11).

"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," British Prime Minister Gordon Brown said in a statement.

"Nuclear is clean, secure and affordable; its expansion is crucial for Britain's long term energy security, as we reduce our oil dependence and move towards a low carbon future," he added. The statement said the British government had agreed to sell its 36 percent stake for 774 pence a share.

British Business Secretary John Hutton said the deal could improve Britain's energy mix, create jobs and offer "a wealth of opportunities for British manufacturers."

Hutton said the recommended deal would amount to "one of the largest foreign direct investments ever made in Britain."

The British government said EdF had agreed to continue operating British Energy's eight existing nuclear power stations as well as invest in four new reactors.

The deal requires the approval of shareholder and regulators.

The French nuclear powerhouse has been looking to gain access to new nuclear sites in Britain, which has announced plans to invest billions to develop renewable energy sources -- including nuclear.

EdF is already present in Britain via its EdF Energy subsidiary, which employs 13,000 people and handles 5.5 million customer accounts. It operates two coal-fired power stations as well as a natural gas fueled power plant.

EdF has said it wants to build several new nuclear reactors in Britain. British Energy, Britain's largest electricity generator, has eight nuclear power stations and one coal-powered station.

British Energy said in May that it had received a range of proposals from several parties. EdF was seen as a key contender because of its experience with nuclear power plants.

The British government has a target of generating 10 percent of electricity from renewable sources by 2010 and 15 percent by 2020. It has emphasized the importance of a new generation of nuclear power stations in meeting a broader target to cut carbon dioxide emissions by at least 60 percent of 1990 levels by 2050.

EdF is also in the midst of another buyout bid: It has also offered to purchase U.S. wholesale power supplier Constellation Energy Group Inc. in hopes of unseating a deal Constellation made last week to be sold to Warren Buffet's MidAmerican Energy Holdings Co.

----

Associated Press Writer Emily Flynn Vencat in London contributed to this report.