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Iberdrola set for joint bid for British Energy
Friday, May 09, 2008
SCOTTISHPOWER owner Iberdrola looks set to team up with UK utility firm Centrica to make a bid for Scotland-headquartered British Energy.
An industry insider yesterday revealed that the Spanish company was unlikely to make a solo bid for the power plant operator and said Centrica would be a likely consortium partner.
But he added that today's deadline, set by investment bank Rothschild, which is advising British Energy, may not be met by a number of bidders, including Iberdrola.
The insider said: "The company is still considering its options on this and it understands that this may not be a final deadline in any case.
"Making a bid with a partner is very likely and, looking at the options around, Centrica would be an obvious choice."
However, broker Charles Stanley claimed Iberdrola, along with French nuclear giant EDF, were today expected to provide detailed offers to Rothschild. EDF, which earlier this week reported a 5.2 per cent rise in first-quarter sales as colder weather boosted demand for electricity, is tipped by some experts as a front runner in the field.
Industrial giant Suez, also from France, and Swedish power firm Vattenfall are believed to have dropped out of the race.
Charles Stanley analyst Tina Cook, said a full-blown bid from British Gas owner Centrica was unlikely, making a tie-up with Iberdrola even more likely.
The price could be between 600p and 700p a share, Charles Stanley said, which is at the lower end of analyst expectations and gives the company a market value of between £6.2 billion and £7.2bn. The range is below the current share price of 720.5p.
British Energy, which has its head office in East Kilbride and owns eight nuclear power stations, including Hunterston B in Ayrshire and Torness in East Lothian – as well as one coal fired power station – produces around one-sixth of the UK's electricity.
It confirmed it was holding a series of takeover discussions in March this year, as the UK government confirmed it was considering selling its 36 per cent stake in the business earlier this year.
Last year the government sold a 25 per cent stake in the company for £2.08bn.
British Energy is being eyed by a number of European rivals who want to take advantage of the UK's new drive towards nuclear power.
A spokesman for Iberdrola, which is the world's fourth-largest energy company and the biggest wind-generated power supplier, refused to comment.
This article was featured on The Scotsman website.
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