EdF may sell UK distribution business
Electricité de France (EdF) has appointed financial advisors to assist it in evaluating the potential sale of its electricity distribution business in the UK, operated by its UK subsidiary EDF Energy.
Electricité de France (EdF) has appointed financial advisors to assist it in evaluating the potential sale of its electricity distribution business in the UK, operated by its UK subsidiary EDF Energy.
EDF Energy's electricity distribution business includes both public and private networks. Its public networks distribute power to almost 8 million homes and businesses in the east and southeast of England, including London. Its private electricity networks deliver electricity to major infrastructure projects, primarily in the public sector. These include EDF Energy Powerlink, the power distribution network for London Underground. Other customers include British Airport Authority's (BAA's) Heathrow, Gatwick and Stansted airports, as well as the Channel Tunnel. Altogether, the business operates some 170,000 kilometres of underground cables and overhead lines and 66,300 substations.
EdF has appointed Barclays Capital - the investment banking division of Barclays Bank - and the London branch of Deutsche Bank to advise it on the possible divestment of these distribution networks. Additional support will be provided by BNP Paribas. EdF said that the sale of the business is in line with its previously announced asset divestment program to reduce its net financial debt by at least €5 billion ($7.25 billion) by the end of 2010.
In a statement, the company said, "The evaluation process logically follows the acquisition of British Energy announced in 2008 which has resulted in a better balance between EDF Energy's generation and supply businesses. By improving the capacity to meet the requirements of UK customers, EDF Energy has developed a strong position to grow its retail business." It added, "The acquisition also secures EDF Group a key position in the nuclear revival and is a significant step forward in EdF's plan to build four EPR nuclear reactors in the UK."
EdF Chairman and CEO Pierre Gadonneix said that the possible sale "is part of our development strategy in the United Kingdom, which is a key market in Europe for the group. This process follows British Energy's acquisition which facilitates EdF's plans to develop new nuclear power in the UK and significantly strengthens our position as a UK energy player."
According to the Associated Press, potential buyers of EdF's UK distribution business include Abu Dhabi Investment Authority, Cheung Kong Infrastructure Holdings Ltd, and the Ontario Teachers' Pension Plan and Canadian Pension Plan. It said that Scottish & Southern Energy, National Grid, investment group GIP and Morgan Stanley Infrastructure have also expressed an interest.
Should EdF sell its UK distribution networks business, its remaining UK assets would be in the power generation business, primarily the eight nuclear power plants, comprising 15 reactors, it acquired through its purchase of British Energy in 2008.
