British Energy's largest private shareholder favours its merger with Centrica
25 August 2008
Invesco, the biggest single shareholder in the UK nuclear group British Energy after the British government, has called for the company to be merged with Centrica, which it says is the only solution for the long-term future of both the companies.
The investment group that has 15 per cent of British Energy, as well as 5 per cent of Centrica, says that the proposals have been put to the boards of both companies. The plans, which also include a role for the French energy group EDF, are designed to help the companies to co-operate with EDF to build nuclear facilities in the UK.
Neil Woodford, head of investment at Invesco, has been quoted as saying, "Together they (British Energy and Centrica) can work out a joint venture with EDF to build nuclear sites (in Britain)." He is to lay out his plans to the Shareholder Executive, the body which manages the sale of government assets on 26 August, the Sunday Telegraph reported.
Invesco's insistence that the deal involves the French energy group comes just days after EDF's bid for the nuclear group was rebuffed. Earlier this month, EDF's planned £12 billion ($22.4 billion) takeover of British Energy, which was valued at 765 pence a share and was backed by the government, was rejected by Invesco and by M&G, British Energy's second biggest institutional shareholder with a 7 per cent stake. It is understood that the shareholders were looking for a figure closer to 900 pence a share for their stakes.
Centrica is reported to be welcome about merging with British Energy. Centrica has also stated that it would consider a minority stake in British Energy should a third party buy it. Both Centrica and British Energy declined to comment.
Earlier this month, Centrica revived the prospect of a £22.5-billion all-share merger with British Energy, first mooted at the beginning of the year. This plan was given a lukewarm reception by ministers because the government, which owns 35.5 per cent of British Energy, prefers the idea of a cash offer for its stake as the Treasury seeks much-needed funds. Centrica has since indicated that it would be prepared to pay cash for the Government's stake in British Energy.
