Nuclear power plans scrapped. John Hutton: "disappointed" at EDF failure. EDF pulls out of £12bn deal to buy British Energy

Nuclear power plans scrapped
While the print version of the papers talk of this a done deal,
here’s the latest. The newspaper quotes are of course “online”

Since we are going to be dependent on nuclear power to keep the
lights on and keep warm and since time is very much of the essence
this is seriouis. It’s not necessarily disastrous but it should be a
wake-up call to make Britain more secure in its energy supplies
notably by building new coal-fired power stations - as Italy has just
said it will - and defying the EU bureaucrats who want us green -
with cold presumably.

xxxxxxxxxxxxxxx cs
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POLITICSHOME Blog 1.8.09
John Hutton: "disappointed" at EDF failure
08:50 | 01/08/2008

John Hutton, Business Secretary
Today, BBC Radio 4

Mr Hutton commented on the failure EDF and British Energy to agree a
deal, saying that he was "disappointed".

"Well, we are disappointed by the failure to reach an agreement
overnight. I think it would have been a good fit. EDF are, as people
know, the world's largest nuclear operator. I think it would have
been a very sensible way to take forward new nuclear plans in the UK.

"The future of new nuclear in the UK doesn't depend on this
particular deal.

"It's up to the board now, and to EDF to see if there's any way this
gap can be bridged," he said.

The Business Secretary said there were differences between the
government's view and that of the remaining shareholders.

"We thought it was a good deal, we were ready to accept the deal.

"That wasn't the view of all of the shareholders... The government is
only a minority shareholder

"I do remain convinced that this is the right deal," he said.

He refused to be drawn on the windfall tax, saying that "tax policy
is a matter for the chancellor... The chancellor is looking at, I
think, all of these options sensibly and fairly."

He added: "We've got to encourage very significant investment into
our power generation system over the next ten to fifteen years, we've
got to have a fiscal and a regulatory climate that encourages all of
that investment, because, quite simply, it will go elsewhere if
there's no confidence in the UK market."

Pressed on whether Labour could win the next election with Gordon
Brown as leader, he said: "I think we can win the next election."

He was asked whether anything should be read into his failure to
include the words "Gordon Brown" in his answer.

"For heaven's sake, lets get serious, of course we can win with
Gordon as our leader," he said.
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Peter Luff welcomes the failed British Energy takeover
08:20 | 01/08/2008

Peter Luff, Chairman of the Commons Business and Enterprise committee
Today Programme, BBC Radio 4

Questions are being raised surrounding the government’s programme for
nuclear planning following British Energy’s rejection the EDF over
takeover, Mr Luff said that it was positive that the deal had not
gone through.

“I am glad the deal has fallen though as there would have been a
quarter of supply coming from one supplier (EDF) - you can’t have
this concentration of power.

“We are running very fast to catch up - we do need these new power
stations, otherwise the lights go out.”
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TELEGRAPH 1.8.08
EDF pulls out of £12bn deal to buy British Energy
By David Litterick
Last Updated: 6:20am BST 01/08/2008

French utility giant EDF has dramatically pulled out of a £12bn deal
to buy British Energy, the UK's nuclear power company, hours before
it was expected to (be) announced.

In a statement, EDF said that "after in depth discussions, EDF
considers that the conditions for a major development in Great
Britain are not met to date." The last minute ditching of the offer
is likely to hit British Energy shares this morning.

Legal and banking teams met last night to hammer out the final
details of the 760p to 770p a share offer, which has been agreed by
the British Energy board and by the Government, which owns a stake of
around 35pc in the nuclear generator.

EDF has also been holding talks with Centrica about bringing the
owner of British Gas on board as its partner, although the exact
terms of the deal between the two have yet to be agreed and talks
were continuing late last night. Centrica has been discussing a 25pc
stake, in a move it hopes will deflect attention from its gas price
increases and profits.

Centrica reported an 88pc jump in pre-tax profits and boosted its
payout to shareholders less than a day after increasing gas bills by
35pc.

First-half pre-tax profits jumped to £3bn from £1.57bn a year ago,
while the dividend was increased 16pc to 3.9p a share. However, the
company said that on an operating level, profits slumped heavily to
£992m from £1.23bn. The difference is made up by forward gas
contracts - an effective hedge under which Centrica bought gas
earlier this year to lock in lower prices.

Much of the last-minute British Energy discussions are understood to
revolve around contingent value rights (CVRs), which would enable EDF
to pay a smaller amount of cash up front, but also issue securities
to British Energy shareholders that would enable them to receive
future payments based on the company's performance.

EDF originally made an approach that valued British Energy at less
than 700p a share, a level that was considered insufficient by major
shareholders. However the Government's hopes of generating a
competitive auction foundered as, despite interest from other
European utility groups, no other formal bid was made.

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FINANCIAL TIMES 1.8.08
EDF bid for British Energy in tatters
By Rebecca Bream in London and Ben Hall in Paris
Last updated: August 1 2008 08:31

EDF’s attempt to become the UK’s biggest power generator was in
tatters after its offer to buy British Energy, the UK nuclear group,
fell through just hours before a deal was due to be announced.

The French group had been preparing to unveil on Friday an agreed
takeover bid worth about £12bn, the culmination of a lengthy and
tortuous negotiation process.

A member of EDF’s board confirmed on Thursday that it had made an
offer for British Energy, but declined to comment on the details.
Another person close to the situation said the offer comprised two
options – 765p a share in cash, or 700p cash plus a “contingent-value
rights component” that would pay out if British Energy performed in
line with its targets.

British Energy shares dropped 6.7 per cent to 680?p in early London
trading on Friday.

EDF’s offer was put to British Energy’s board late on Thursday, with
the French group confident of winning a recommendation. But in a
surprise late development, it appeared that British Energy’s board
rejected the offer.
“There was a last-minute hitch,” said a person familiar with the
negotiations. EDF put out a late statement saying that “after in-
depth discussions, EDF considers that the conditions for a major
development in Great Britain are not met to date”.

Dow Jones reported that investor demands may have led to the
breakdown. “Two UK pension funds – big shareholders – requested EDF
put more money on the table, and EDF refused. So British Energy
turned the offer down,” it quoted a person familiar with the matter
as saying.

British Energy on Friday said: “Advanced discussions with a party
have continued but without agreement to date. A further announcement
will be made in due course. There can be no certainty that the
discussions will lead to an offer being made.”

It was not clear if a deal could be salvaged in the coming weeks, or
if British Energy and the UK government – owner of a 35 per cent
stake in the group – will have to revert to its back-up plan of
forming joint ventures with several different energy companies to
build new nuclear reactors in the UK. This could mean that new
reactors are developed more slowly than if EDF had bought British
Energy and co-ordinated the next wave of nuclear development.

British Energy held talks with several energy companies earlier this
year, including RWE of Germany, Iberdrola of Spain and Vattenfall of
Sweden, but EDF became the frontrunner to buy the group after making
an offer of 680p a share in May.

This was rejected as too low, but the two sides carried on talking
and the French group indicated it was prepared to pay slightly more
to reflect the rise in power prices in the UK.

British Energy is the UK’s largest generator of power, with a 19 per
cent market share. But EDF’s main reason for wanting to buy the group
is that the UK’s new nuclear reactors are expected to be built on
existing nuclear sites, and British Energy owns what are seen as the
best locations.

The UK government has said that it wants to see an expansion in
nuclear capacity to reduce carbon emissions. [The main thing is
merely to replace existing nuclear stations as the first urgent
step ! -cs]

EDF on Friday reported 2 per cent rise in half-year core earnings to
€9.04bn.