Why is the deal between EDF and British Energy in trouble?
The two firms had been expected to announce on Friday an agreed deal for EDF to buy British Energy for about 12bn. But, at the eleventh hour, EDF pulled back, saying “conditions were not right” for the deal while British Energy warned a deal may never happen. The key stumbling block is over price. EDF offered to pay 765 pence for every British Energy share, an increase on its initial offer of 700p earlier this year. But two leading British Energy shareholders – British financial firms Invesco and Prudential – think the firm is worth substantially more than that. They are thought to value the shares at about 10 each, arguing that energy prices are likely to remain at their current high levels over the next few years. Why is the deal so crucial to the UK’s energy supply? Nuclear power accounts for about 20% of the UK’s current energy supply but the country’s nuclear infrastructure is fast reaching the end of its natural lifespan.
