EDF Board May Meet Today on $23 Billion Bid for British Energy

By Tara Patel and Sandrine Rastello

Sept. 23 (Bloomberg) -- Electricite de France SA's board of directors plans to meet as early as today to ratify its improved 12.4 billion-pound ($23 billion) offer for British Energy Group Plc, according to two people familiar with the matter.

The bid values the biggest U.K. power producer at 774 pence a share, or 9 pence more than a previous cash bid from EDF, Europe's largest electricity generator, according to two people, who didn't want to be identified because the terms of the transaction have yet to be completed. EDF plans to proceed with a formal offer because British Energy has indicated it would accept, they said.

The takeover, after more than four months of talks, would give EDF control of eight British nuclear plant sites with potential for building new reactors. The French utility already supplies gas and electricity to about 5 million customers in the U.K. The purchase by EDF, whose 58 nuclear plants produced 77 percent of France's electricity last year, comes as the U.K. government seeks investment in atomic energy.

The move is part of a global trend toward nuclear energy after oil prices soared to records this year, and amid pressure from environmentalists to cut pollution stemming from burning fossil fuels. The French government owns 85 percent of EDF.

East Kilbride, Scotland-based British Energy, of which the U.K. government owns 36 percent, rejected an offer on July 31 from EDF at 765 pence a share. British Energy's biggest private shareholders said the bid undervalued its nuclear stations and adjacent land where more reactors may be built.

Centrica Role

The offer to British Energy shareholders includes an alternative to an all cash offer in the form of Contingent Value Rights, or CVRs, which give shareholders a slice of future profits, one of the people said.

EDF spokesman Francois Molho declined to comment and Andrew Dowler, a spokesman for British Energy did not immediately respond to a message left on his cell phone.

Centrica Plc, the U.K.'s biggest energy supplier, said on Aug. 4 it was in talks to take a ``minority ownership position'' in British Energy if the company was sold. Centrica's Chief Executive Officer Sam Laidlaw is seeking assets to reduce the company's exposure to energy market fluctuations and customers from price swings.

An announcement of a deal between EDF and British Energy will likely include a reference to Centrica's planned role, which won't be defined in detail until the takeover receives regulatory approval, two people familiar with the talks said. Andrew Turpin, a spokesman for Centrica, declined to comment.

Electricite de France is not only seeking an acquisition in the U.K. Yesterday it said it made a proposal on Sept. 19 to buy Baltimore-based Constellation Energy Group Inc. with U.S. buyout firms KKR & Co. LP and TPG Capital.

The proposal included a takeover approach at $35 a share for the utility.

Warren Buffett's MidAmerican Energy Holdings Co. on Sept. 18 agreed to buy Constellation for about $4.7 billion. The cash deal was worth $26.50 a share. Buffett's Berkshire Hathaway Inc. is the world's sixth-biggest company by market capitalization, worth $223.4 billion, according to Bloomberg data. Until Buffett's approach, EDF was the biggest shareholder in Constellation, with 9.5 percent.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net