EDF Said to Offer 774P/Share for British Energy

By Anne-Sylvaine Chassany and Francois de Beaupuy

Sept. 18 (Bloomberg) -- Electricite de France SA, Europe's biggest power producer, raised its offer for British Energy Group Plc to 774 pence a share, valuing the U.K. utility at 12.4 billion pounds ($22.6 billion), two people familiar with the matter said.

The sweetened offer is 9 pence a share more than the previous cash bid of 765 pence, and Paris-based EDF's board will meet on Sept. 22 to discuss it, said the people, who didn't want to be identified because the terms of the transaction have yet to be completed.

By taking over British Energy, EDF, which has 7.9 million customers in the U.K., would win control of eight British nuclear plant sites with potential for building new reactors. The U.K. government wants investment in new nuclear plants and is identifying sites for reactors.

``The price seems fair,'' Chicuong Dang, an analyst at Richelieu Finance in Paris, which has about $6.4 billion under management, including EDF shares. British Energy investors may have hoped for a higher offer a few months ago, before the markets for credit and energy prices deteriorated, he said.

EDF advanced as much as 2.62 euros, or 5.6 percent, to 49.75 euros a share in Paris trading, while British Energy rose as much as 37.5 pence, or 5.2 percent, to 753 pence in London.

EDF is ``making progress'' in the talks and news of a possible deal may be known early next week, French Finance Minister Christine Lagarde said today in a Bloomberg News interview. Lagarde said the government, which owns 85 percent of EDF, backs the company's plans to expand in the U.K.

Offer Details

Andrew Dowler, a spokesman for British Energy, declined to comment on the latest negotiations, as did EDF spokesman Francois Molho.

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 eight nuclear stations and adjacent land where more reactors may be built.

British Energy's land is attractive to EDF, which has plans for at least four new U.K. reactors from 2017. U.K. Prime Minister Gordon Brown supports the expansion of nuclear power to replace older plants and cut carbon-dioxide emissions, and the sale of British Energy to EDF to accomplish that goal.

Currently, terms being completed between the parties include documentation for a possible New York listing of Contingent Value Rights, or CVRs, which give shareholders a slice of future profits, one of the people said.

The bid will offer British Energy shareholders a choice between an all-cash option or a cash-and-CVR one.

The price is ``much too high,'' the energy branch of the Confederation Francaise du Travail union representing EDF employees said in a statement today, adding that the value of British Energy is hard to estimate.

To contact the reporter on this story: Anne-Sylvaine Chassany in Paris achassany@bloomberg.net