Centrica buys stake in nuclear power operator

The UK’s biggest energy supplier is set to pay £2.3bn to gain 20 per cent of British Energy

BY Euan Stuart LAST UPDATED AT 11:16 ON Mon 11 May 2009

The sale by Electricite de France of 20 per cent of its stake in nucelar generator British Energy to Centrica was announced on Monday. The deal will give Britain’s top energy company access to nuclear power at a cost of £2.3bn, half of which will be paid in cash and half accounted for by the transfer of its 51 per cent stake in SPE,  Belgium’s second-biggest power company, to EDF.

The deal – valuing British Energy at 700p per share, should be agreed later today, after months of protracted wrangling over valutaions.

Last year a tentative agreement was reached between the two sideas for Centrica to buy 25 per cent at £3.1bn, a price equivalent to the EDF’s buy cost.

However the subsequent fall in energy prices put paid to that arrangement and with EDF under pressure on its debt levels it was forced to do a deal at a lower level.

For Centrica, the purchase gives it access to nuclear power for the first time, as demand for energy declines and gas production levels fall.

The company has around 15.6m electricity and gas customers in the UK and has recently announced a 10 per cent cut in rates. The purchase is in line with British government policy on promoting nuclear power and should be completed by the end of the third quarter this year.

WHAT THEY ARE SAYING
A City analyst,
quoted in the Guardian: "The EDF deal is an attempt to even out Centrica's earnings stream and create more certainty for shareholders.You should look at it as a hedge against the vagaries of global commodity prices." · 

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