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Centrica agrees EDF deal: buys 20% of UK nuclear operator British energy, EDF takes Belgian SPE

By Amarendra Bhushan for CEOWORLD Magazine Updated:May 11, 2009

British utility and gas owner Centrica has agreed to acquire 20% in local sector group British Energy from French Electricite de France SA (EDF) for GBP2.3bn (USD3.5bn) (EUR2.6bn). Deal that will put the British Gas owner to the frontline of Britain’s £40 billion nuclear revival.

British Energy was acquired by EDF earlier this year for EUR15bn (USD20bn).

Centrica will pay £3.1 billion to take a 25% stake in British Energy.

Sam Laidlaw, boss of Centrica, and his counterpart Vincent de Rivaz at EDF, set to sign the agreement, Under the terms of the deal, EDF will, in turn, buy the 51% stake of Centrica in Belgian generation and supply business SPE for EUR1.3bn.

EDF and Centrica intend the new nuclear joint venture to construct, operate and decommission four European Pressurised Reactors (EPRs)

The SPE stake is worth at least £1.2 billion.

British Energy runs eight UK power plants, including Torness, Hartlepool and Sizewell B, and EDF plans to build four new plants on existing sites, with the first due to be up and running by the end of 2017.

EDF and Centrica will offtake the available power from the British Energy fleet on an 80/20 basis

EDF will have day-to-day operational control and Centrica has a package of governance rights.

EDF and Centrica have formed an 80:20 venture for building, operating and decommissioning four EPRs, which was announced in 2008.

EDF and Centrica will take power from tee BE fleet of eight nuclear power stations and one coal-fired power station at an 80:20 ratio.

EDF will supply Centrica with 18TWh of power at market prices for the period 2011-2016.

Centrica will also assume 20 per cent. of the liability for contingent guarantees given by EDF in respect of the Contingent Value Rights (CVRs) issued by Lake Acquisitions as part of its acquisition consideration for British Energy

Pierre Gadonneix, Chairman and Chief Executive of EDF, said: “This transaction, part of the group’s strategy of developing its positions in Europe, will enable leading British generator, Centrica, alongside EDF, to take part in the re-launch of nuclear energy in the United Kingdom through an industrial partnership in a form already pioneered by EDF in China and the US.

“This transaction will also help balance both the generation and supply businesses of EDF Energy. The asset swap in this deal will also see the EDF group reinforce its Benelux presence by becoming the second-largest generator in Belgium.”

Roger Carr, Chairman of Centrica, said: “We are delighted to have successfully concluded an agreement with EDF as a world leader in nuclear power. The deal represents good value for Centrica shareholders, improves the strategic balance of our business and further underpins our green energy credentials.

“The attractive price secured for the sale of SPE will help preserve our balance sheet firepower as we focus the group on growth opportunities in the UK and North America.”

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