Nuclear Power: Suez Pulls Out of Race for British Energy

Suez, the French utility, today pulled out of the bidding war for the government's stake in British Energy, leaving just two potential candidates to take over the nuclear power operator.

The Franco-Belgian group, always considered an uncertain bidder, confirmed that its main propriety was to complete its merger with state-owned gas group Gaz de France. That tie-up has been delayed by a series of court rulings and union resistance.

Its decision to leave the field leaves state-owned EDF, the French power group, and rival German and Spanish companies, RWE and Iberdrola, who are preparing a combined offer, to fight it out for the government's 35% stake.

"As previously indicated, the completion of the merger with Gaz de France remains Suez's key priority," Suez said. "Accordingly, Suez confirms that, in its discussions regarding the future development of the nuclear energy sector in the UK, those relating to a potential offer for British Energy have now ceased."

It said UK takeover rules would prevent it from resuming talks over a possible offer for British Energy until it had completed its merger with GDF. This is due later this year.

The government and its advisers had hoped that the prospect of a new generation of nuclear power plants being built in the UK would prompt substantial interest in BE which provides 18% of Britain's power, with offers close to or even above 700p a share. But Suez's withdrawal dashes those hopes, with EDF understood to have indicated an offer below 650p.