Under the terms of the agreement announced yesterday (24 September), EDF will offer 774 pence in cash for each British Energy ordinary share, a price which values the company at "approximately £12.5 billion", according to EDF.
The deal involves a commitment by EDF to build four new plants to help replace Britain's ageing stock of nuclear power stations, which currently provide 19% of the UK's electricity. The new reactors would be the state-of-the-art EPR model developed by French group Areva.
In return, EDF got assurances that it will "dispose of specified areas of land in the vicinity of existing nuclear sites including some land currently owned by British Energy". The agreement also involves "maximising the operational life of the existing British Energy fleet where economic and safe to do so".
The last of Britain's existing nuclear plants is scheduled for closure by 2035, leaving the country with a looming energy supply gap.
"For EDF, this is an historic milestone in our strategic development plans in Europe," said Pierre Gadonneix, its chairman and CEO of EDF. "For British Energy, it places it at the vanguard of New Nuclear Build in the UK and at the centre of the global nuclear renaissance," he added.
In a statement, UK Prime Minister Gordon Brown said: "Nuclear is clean, secure and affordable; its expansion is crucial for Britain's long-term energy security, as we reduce our oil dependence and move towards a low carbon future."
British energy policy "has been developed in recognition that new nuclear power stations can help the UK to meet its objectives on climate change and energy security, at a time of increasing energy demand and finite and decreasing resources," EDF said.
The takeover will allow Britain to regain expertise in nuclear power engineering which it lost following a decision to freeze new nuclear construction. EDF seems eager to fill this gap, saying it seeks to "reinforce its assets and employees' skills in the UK, a long-time core market, as part of its strategy to extend its position in Europe by securing additional skills and expertise".
France and the UK agreed to step up their cooperation on nuclear in March this year during an official visit of French President Nicolas Sarkozy to Britain (EurActiv 27/03/08).
"It is positive for EDF and takes away the risk that they will pay off the wall, and the price is reasonable," a London-based analyst told Reuters. "There is clearly value in nuclear and building nuclear plants but it is quite long term."