France's EDF Buys British Energy Firm
Thursday, September 25, 2008
PARIS, Sept. 24 -- French power provider Electricite de France said Wednesday it has agreed to acquire British Energy Group for about $23.2 billion in cash in a deal that would create a powerhouse in nuclear energy.
EDF is already the world's largest nuclear plant operator, running all 58 of France's nuclear reactors. British Energy operates eight nuclear power stations. The combined company would be Britain's largest power company overall as measured by generating capacity -- with 16.5 gigawatts of installed capacity.
The deal comes as European government officials are seeking energy independence and less reliance on oil and coal that contribute to global warming. EDF Chairman Pierre Gadonneix said the deal fulfills his company's "strategic aims of consolidating our leadership in nuclear power globally, and consolidating our development in the UK."
British Energy Chairman Sir Adrian Montague said it will combine British Energy's generating capability with EDF's strength in the supply business.
The British government said EDF had agreed to continue operating British Energy's eight nuclear power stations as well as invest in four new reactors.
In Paris trading on Wednesday, shares of EDF rose 3.6 percent to $76.53. In London, shares of British Energy climbed 5.7 percent to $14.21.
The British government was in favor of the deal.
"This deal is good value for the taxpayer and a significant step towards the construction of a new generation of nuclear stations to power the country," British Prime Minister Gordon Brown said in a statement.
"Nuclear is clean, secure and affordable; its expansion is crucial for Britain's long term energy security, as we reduce our oil dependence and move towards a low carbon future," he added.
EDF is also in the midst of another buyout bid: It has offered to purchase U.S. wholesale power supplier Constellation Energy Group in hopes of overturning a deal Constellation made last week to be sold to MidAmerican Energy Holdings, a unit of Warren E. Buffett's Berkshire Hathaway.
EDF already owns 9.5 percent of Baltimore-based Constellation and said it is willing to pay $35 per share in a deal that would be valued at $6.2 billion. MidAmerican's offer is for $26.50 per share, or $4.7 billion. The offers came after Constellation's shares plummeted and liquidity concerns had analysts worried that the company would go out of business.
Buying Constellation Energy would not be easy for EDF. Nuclear Regulatory Commission rules prohibit outright ownership of Constellation Energy's five reactors by a foreign company. Constellation has two reactors in Maryland and three in upstate New York.
EDF's Gadonneix said that he is open to working with another U.S. partner if EDF fails to take over Constellation.
Associated Press Writer Emily Flynn Vencat in London contributed to this report.