Duo locked in British Energy stake talks

Centrica and French utility EDF were today reported to be at loggerheads over the planned sale of a 25% stake in nuclear generator British Energy.

It has been reported that the recent sharp fall in electricity prices meant Centrica was under pressure from shareholders not to overpay for the stake.

Last summer, the two companies reached a non-binding agreement that Centrica would buy the holding for £3.1 billion, placing the same value on British Energy as was paid by EDF for the whole company earlier in the year.

EDF and Centrica were quoted as saying that talks were ongoing, although it also said the pair had set a target of 31 March for an agreement.

The deal is seen as a strategic priority for Centrica, as the British Gas owner looks to boost upstream assets and protect itself against volatile energy markets.

British Energy plants supply the UK with around one-sixth of its electricity needs in total. It has sites at Heysham in Lancashire, Hartlepool, Dungeness in Kent, Hinkley Point in Somerset, Hunterston in Ayrshire, Sizewell in Suffolk and Torness in East Lothian.

EDF plans to construct and operate two new reactors each at Hinkley Point and Sizewell. It will build longer-lasting EPR reactors, which are a type of pressurised water reactor, similar to those already in operation in nuclear industry-reliant France.

EDF - majority-owned by the French government and the world's biggest nuclear power provider - reportedly wants to stick to the agreed price with Centrica, although a compromise agreement could include side deals such as Centrica taking stakes in sites for new nuclear development.

In February Sam Laidlaw, Centrica's chief executive, said: "The question is: can we do a deal for value? And we are clearly focused on that."