Centrica, EDF to sign nuke deal
PARIS: France's state-owned EDF and Britain's Centrica announced on Monday a long-awaited joint venture aimed at relaunching nuclear energy in Britain.
EDF, the world's biggest nuclear energy producer, also said it would buy 51 percent of the Belgian electricity company SPE from Centrica for 1.3 billion euros (1.8 billion dollars), the companies said in a joint statement.
The deal with Centrica will enable the leading British generator "to take part in the re-launch of nuclear energy in the United Kingdom," said Pierre Gadonneix, chairman and chief executive of EDF.
Centrica had initially agreed a 3.1-billion-pound deal with EDF last year which would have seen it take a 25-percent stake in the nuclear operator British Energy, which EDF acquired control of in January.
But negotiations faltered after electricity prices dropped.
Under the new deal, EDF and Centrica will create a joint venture company, 80 percent controlled by the French group and 20 percent by Centrica, to build four European Pressurised Reactor nuclear power stations in Britain.
Centrica will spend 2.3 billion pounds to buy the 20 percent stake in British Energy, which now runs six nuclear plants in England and two in Scotland, which are due to be de-commissioned.
Analysts noted that the price Centrica paid for its stake in British Energy represented a discount of six percent on the price EDF paid when it bought the company in January.
But Gadonneix told reporters in a conference call that: "It's an adjustment that I would say is almost symbolic compared to the amount we paid."
"I would even say it is a confirmation of the value of British Energy," he said, adding that both EDF and Centrica might allow new shareholders into their joint venture.
The market reacted coolly to the announcement, with shares in EDF falling 3.29 percent in Paris to 35.26 euros in midday trading.
But analysts at CM-CIC Securities said that while EDF had little choice but to offer the discount, "on the whole, they pulled it off quite well."
The deal comes amid growing interest in nuclear power around the world, sparked by a desire by governments to reduce their dependence on oil, gas and coal.
France produces around 80 percent of its electricity from nuclear power and President Nicolas Sarkozy has been active in trumpeting his country's know-how to win French companies new business abroad.
EDF's ambitions often come in for criticism by competitors who complain it is protected against takeover bids by the French state's majority stake, and by its near monopoly position because of regulated electricity prices.
In the deal with Belgium's SPE, which sees EDF buy 51 percent of the giant electricity company from Centrica, the remaining 49 percent of the company not owned by Centrica will stay with Belgian municipalities and banks.
SPE is Belgium's second-biggest electricity company with around 1.6 million customers and a fifth of the market.
EDF has already tried this kind of partnership in China and the United States, said Gadonneix in the statement.
"This transaction will also help balance both the generation and supply businesses of EDF Energy," he said.
"The asset swap in this deal will also see the EDF group reinforce its Benelux presence by becoming the second-largest generator in Belgium."