British Energy Prepares to Push French to Raise Their Bid

Shareholders in British Energy will meet in Scotland this week with the future of the nuclear generator hanging on a battle of wills between the board and EDF over the French company's bid for BE.

The nuclear company's directors are understood to have told the electricity generator that the price it has indicated it could be prepared to pay is not enough. However, the state-owned French utility is said to be determined to maintain what one source described as "price discipline".

On Friday night, BE's share price closed at 697p - though some analysts have calculated that the combination of its existing nuclear generation and its prospects for a new generation of power plants make it worth more than £11. EDF is believed to have indicated it could be prepared to offer more than 680p a share but less than 735p.

The government, which owns 35% of British Energy, has kept a low profile in the negotiations, but that may change if the situation drags on without resolution.

Though British Energy's sites give it a key role in the development of new power stations, it is not the only owner of appropriate locations. The Nuclear Decommissioning Authority owns a number of Magnox reactor sites, some of which have sufficient land to accommodate a new plant and easy access to the national grid.

The NDA has already sought expressions of interest for the commercial development of its land, with the Wylfa site in Anglesey said to have attracted particular attention.

British Energy could pursue a policy of maintaining its independence, working in partnership with others who would provide capital. However, sources have suggested it would be less complex if the company was owned by a parent with deep enough pockets to fund new build.

Though EDF has always been seen as the frontrunner among British Energy's suitors, others - including Centrica, RWE and Iberdrola - have looked at bidding for or collaborating with British Energy.