The Sunday Telegraph, which quoted an unnamed source close to the company, said it was sounding out institutional investors about a possible all-shares merger. Centrica was unavailable for comment on the story.

A combination of British Energy and Centrica would have a stock market value of 22.5 billion pounds (28.5 billion euros, 44.4 billion dollars), according to their closing share price levels before the weekend.

British Energy faces an uncertain future after talks collapsed on Friday about a potential multi-billion-pound takeover from Electricite de France (EDF), which is the biggest nuclear power generator in the world.

Centrica would have taken a minority stake in British Energy as part of EDF's ditched takeover plans.

The Sunday newspaper added that Centrica would not pursue a merger without the backing of shareholders and the government.

The company, which owns British Gas, had suggested a merger to British Energy's management at the start of the year, but investors had been keen to pursue a cash takeover offer, it said.

Britain's government owns 35 percent of British Energy but wants to sell its stake. The partly-privatised group provides almost one fifth of the nation's electricity and owns eight nuclear power stations.

Prior to last Friday, EDF, Europe's number one electricity producer, had been widely regarded by analysts as the favourite to buy British Energy.

According to various media reports, EDF's bid -- pitched at 765 pence per share or 12.0 billion pounds -- failed because it was rejected by two key institutional investors that wanted more cash.

The breakdown of talks was a major blow to the government's plans to fund new nuclear reactors by selling its sizeable stake.

The Observer newspaper, which did not cite its source, said Sunday that EDF had not given up hope of buying British Energy.

The Sunday Telegraph added that the French state-owned company was still reeling from its rejection but could come back with a higher offer above 800 pence per share.

earlier related report
British Energy, EDF takeover talks stall
British Energy faced an uncertain future on Friday after French utility giant EDF walked away from a multi-billion-dollar takeover of the nuclear power generator.

The breakdown of takeover talks is a blow to the British government's plans to fund new nuclear reactors by selling its sizeable stake in British Energy.

In Paris on Friday, the head of Electricite de France, the biggest nuclear power generator in the world, said that "financial conditions" had not yet been met for acquisition of British Energy.

A source told Dow Jones Newswires that the two companies may decide to restart talks but added that EDF did not intend to increase its offer.

The BBC reported that major shareholders in British Energy, Invesco and Prudential, were holding out for a higher price owing to the surging cost of fuels.

Meanwhile Britain's Business Secretary John Hutton told the public broadcaster that the government was "disappointed" at the failure to reach a deal. Britain's Labour government owns more than a third of British Energy.

"We are disappointed by the failure to reach an agreement overnight," Hutton told BBC radio. "I think it would have been a good fit."

He added: "It's up to the board now and EDF to see if there is any way that this gap can be bridged."

British Energy said in a statement that "advanced discussions with a party have continued but without agreement to date," leading to a sharp drop in its share price on Friday.

Speaking at a press conference in Paris, EDF chairman and chief executive Pierre Gadonneix said that talks had ended overnight without an agreement on a takeover by the group, in which the French state is the majority shareholder.

"Following in-depth discussions, and after hearing the demands of all sides, we deem that the financial conditions allowing a major development in Britain by EDF have not currently been met," he said.

Gadonneix added that, in light of a trend towards nuclear power in several markets, EDF -- which Friday declared a 12.2-percent drop in half-year profits to 3.08 billion euros -- intended to play a leading role.

EDF, also Europe's number one electricity producer, had been widely expected to confirm that a deal had been struck to buy British Energy, which has a market value of 12 billion pounds (15.5 billion euros, 24 billion dollars).

A source close to talks with British Energy told AFP on Thursday that the French group's directors had backed a takeover.

The bid was said to have been in the form of either a cash-only deal worth 765 pence per share or a cash option worth 700 pence a share plus shares.

The offer was aimed at the British government's 35.2 percent stake in British Energy. Under takeover rules, any bid for the government stake would trigger an offer for the rest of group.

British Energy's share price sank 4.04 percent on Friday to close at 700 pence on London's FTSE 100, which ended 1.06 percent down.

EDF dropped 3.13 percent to finish at 54.20 euros on the Paris CAC 40, which closed 1.78 percent lower.

British Energy provides almost one fifth of Britain's electricity and owns and operates eight nuclear power stations.

The government wants to see a renewal of its nuclear-power generating capacity and the assets owned by the group are seen as a springboard for any such effort.

"The future of new nuclear in the UK doesn't depend on this particular (EDF) deal," Hutton said in his interview with the BBC.

"I think we are absolutely committed to new nuclear power and if this deal is not able to go through for whatever reason, we will be looking at plans to make sure we can continue with our foot on the floor because Britain needs these new nuclear power stations."

Britain's governing Labour Party called nuclear power an "unattractive" option as late as 2003, but has changed its mind as energy costs soar, initiatives against climate change intensify and North Sea oil and gas stocks dwindle.

It also follows an increasing global trend towards atomic power, which currently provides about 16 percent of the world's electricity.

An EDF-British Energy tie-up would strengthen EDF's presence in Europe, where it now wants to focus its operations after withdrawing from Brazil and Argentina in 2007.

Community
Email This Article
Comment On This Article

Share This Article With Planet Earth

del.icio.us	Digg	Reddit
YahooMyWeb	Google	Facebook

Related Links

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News