Centrica buys stake in E.D.F.Â’s British Energy

Centrica, the largest British energy company, will buy a 20 percent stake in the British nuclear power unit of Électricité de France, the two companies said, as they form a partnership to build the next generation of power stations.

The companies said Centrica, which operates British Gas, will pay £2.3 billion, or about $3.5 billion, for one-fifth of British Energy, which E.D.F. acquired in January. The companies said the price represents a discount of about 6 percent for the stake compared to the price of £12.2 billion that E.D.F., Europe’s largest electrical utility, paid for British Energy.

As part of the deal, E.D.F. will acquire Centrica’s 51 percent stake in the Belgian utility S.P.E. for £1.2 billion. As a result, the cash payment by Centrica is only £1.1 billion.

British Energy operates eight nuclear power stations in Britain. E.D.F. and Centrica said they would also form a joint venture, with E.D.F. holding 80 percent and Centrica the rest, to build four new nuclear power stations there.

The new plants will be European Pressurized Reactors, a type of reactor designed and built by Areva, the French engineering giant. The new reactors are meant to be safer than previous models, incorporating features to prevent core meltdown and protect against exceptional hazards, such as airplane crashes and earthquakes.

Pierre Gadonneix, the E.D.F. chief executive, said in a statement that the deal was a way for Centrica and E.D.F. “to take part in the relaunch of nuclear energy in the United Kingdom.” The French state holds about an 85 percent stake in E.D.F.

The discounted price suggests that the value of British Energy has fallen as electricity prices decline in the face of a weakening economy. While that raises the possibility that E.D.F. will have to write off part of its purchase price, Mr. Gadonneix said in a conference call that the discount was “quasi symbolic.”

The companies agreed that E.D.F. would operate British Energy, while Centrica will have representation on the board. They will share the power output from British Energy proportional to their ownership, and Centrica will receive 18 terawatt hours more of power at market prices over five years beginning in 2011.

In the statement, Roger Carr, the Centrica chairman, said the deal was “good value for Centrica shareholders, improves the strategic balance of our business and further underpins our green energy credentials.” He also suggested that Centrica was looking for acquisitions in Britain and North America.

The deal is contingent on regulatory approval, and Centrica shareholders will have to back it at an extraordinary general meeting next month.

Shares of Centrica rose 3.6 percent in London early trading, while shares of E.D.F. fell 2.6 percent.

Related News

alberta energy prices to soar

Experts warn Albertans to lock in gas and electricity rates as prices set to soar

CALGARY - Energy economists are warning Albertans to review their gas and electricity bills and lock in a fixed rate if they haven't already done so because prices are expected to spike in the coming months.

"I have been urging anyone who will listen that every single Albertan should be on a fixed rate for this winter," University of Calgary energy economist Blake Shaffer said Monday. "And I say that for both natural gas and power."

Shaffer said people will rightly point out energy costs make up only roughly a third of their monthly bill. The rest of the costs for such…

READ MORE
working at home during locakdown

Electricity demand set to reduce if UK workforce self-isolates

READ MORE

tidal power

Is tidal energy the surge remote coastal communities need?

READ MORE

The Collapse of Electric Airplane Startup Eviation

The Collapse of Electric Airplane Startup Eviation

READ MORE

clary power lines

Electricity alert ends after Alberta forced to rely on reserves to run grid

READ MORE