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Bidders seek fusion with British Energy

Created:
16 May 2008
Written by:
Jonas Crosland

With its stop-start output and ageing reactors, British Energy isn't an obvious bid target - but it's enjoying an embarrassing wealth of potential bidders, some of which are suggesting values in excess £10.9bn (the current share price values the company at £7.4bn).

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That's good news for HM Treasury, because the government is sitting on a 35 per cent stake which could be worth as much as £4bn - more than enough to pay for the latest income tax give-away. And injecting fresh blood into British Energy would tie in nicely with government plans to promote a new batch of nuclear power stations to increase energy security and reduce greenhouse gases. British Energy already owns most of the plum sites for building new power stations - a factor that would significantly speed up the building process. This one still has some way to run

BHP Billiton and Rio Tinto spent much of the week leap-frogging each other on positive trading news, but also on yet another round of bid speculation. This time much of the spotlight has been on BHP amid suggestions that a state-controlled Chinese group has hired an investment bank to organise a multi-billion dollar raid for a 9 per cent stake, to be conducted in partnership with a major Australian investment fund. Chinese aluminium group Chinalco already owns a chunk of Rio Tinto, itself the target of a bid from BHP, and having a stake in both companies should they succeed in joining up would be an advantage. And it would also come in useful during talks over iron ore supply prices.

There is no fire yet, but smoke aplenty in the pharmaceutical sector. No company has more than 7 per cent of the global market, and there have been rumours that AstraZeneca is considering a tie-up with Schering-Plough, whose shares have suffered from revelations that its blockbuster anti-cholesterol drug, produced in a joint venture with Merck, is no more effective than a generic produced by none other than AstraZeneca.

MORE ON TAKEOVERS...

Investors Chronicle tracks every formal takeover bid involving a UK-listed company through its weekly takeover tables, which you can download (in Excel format) here.

For a guide to the UK takeover process, click here.

For more IC articles on takeovers, go to our Companies > By Event > Mergers and Acquisitions

For company announcements relating to takeovers, go to our live RNS pages.

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