Government plans to boost nuclear power production in the UK have been dealt a major blow by the collapse of a takeover deal for British Energy.
EDF, the French state-controlled electricity company, and British Gas parent Centrica were poised to announce a £12bn buyout of the nuclear power operator.
British Energy owns eight nuclear power plants and generates around a fifth of the UK's electricity.
It is part-owned by the Government which had hoped to sell its stake.
Reports said the proposed deal broke down after two of the UK company's biggest shareholders requested EDF put more money on the table.
British Energy said in a short statement to the London Stock Exchange that "advanced discussions with a party have continued but without agreement to date," triggering a sharp drop in its share price.
Business minister John Hutton said the government had been ready to accept the EDF offer and was "disappointed" by the failure of the two sides to reach an agreement.
The announcement was an unexpected turnaround after sources said a deal was finally close after months of negotiations.
There is no indication yet that a deal will not eventually go through, but the timing is now unclear.
Analysts said that EDF may be holding out in the knowledge that the British government is committed to increasing nuclear power production and could do with the cash the deal would bring in.
British Energy is key to plans for new nuclear power stations to be built in the UK that were given the green light by the government in January.
City expert David Buik, from finance house BGC Partners, told Sky News: "I smell political brinkmanship in my nostrils.
"EDF know they are in the driving seat as when it comes to nuclear energy they are numero uno.
Source:http://uk.biz.yahoo.com/01082008/140/british-energy-takeover-collapses.html
