Euro utilities eye £2.3 billion BE stake
The potential sale of a 20% stake in UK nuclear power plant operator British Energy by Electricité de France has attracted interest from a variety of European utilities.
The potential sale of a 20% stake in UK nuclear power plant operator British Energy (BE) by Electricité de France (EdF) has attracted interest from a variety of European utilities.
EdF has been acting to reduce its debt by €5 billion ($7.4 billion) before the end of 2010, and has already announced the potential sale of the transmission business of EDF Energy - the UK subsidiary it used to take over BE.
Centrica came in as a 20% equity partner in the purchase of BE and the sale of another 20% portion and the new build program would be an option, but bidders would be unlikely to pay more than the £2.3 billion ($3.7 billion) Centrica paid according to a French banking source.
GdF-Suez is seen as the most likely bidder, said a source familiar with EdF. However, a spokesperson for the company said it had no comment on a potential bid for 20% of BE, but did note that the group has extensive nuclear experience, including in Belgium, the UAE and the UK, and is open to opportunities.
Other interested parties may include any of the utilities that originally circled BE, including Scottish and Southern Energy although it has a large debt pile, as well as RWE, EOn and the Spanish energy giant Iberdrola, through UK subsidiary Scottish Power. Italy's Enel could also look at a bid, said an equity analyst, as could Vattenfall of Sweden, despite forswearing the UK market until the recession is over.
Centrica is thought highly unlikely to bid again, considering a series of financial commitments associated with development costs for UK new nuclear. A spokesperson had no comment. A bid from Enel is unlikely given its heavy involvement with EdF at home in Italy.
The source familiar with EdF said price holds the key to the deal, with bidders very unlikely to pay more than Centrica paid for its stake. EdF would not be able to sell under a certain minimum price for accounting reasons, meaning a deal could be difficult to reach.
A UK industry source agreed that a deal could be problematic, noting that many observers felt that EdF had overpaid for British Energy with its £12.5 billion ($20.2 billion) purchase. The source said that in five to ten years this type of business would attract interest from infrastructure and even private equity funds, but that the development costs are too risky for such bidders at this early stage in the new nuclear process.
