Iberdrola pulls out of auction for British Energy

Source: Exec Digital UK

Date :13/06/2008 10:55:40

The sale of British Energy has been dealt a fresh blow as one of the last remaining bidders, Iberdrola, pulled out of the race, claiming the price was too high.

The company’s Chairman, Ignacio Sanchez Galan, said yesterday, June 12, Iberdrola had formally pulled out of the race to buy British Energy on the grounds that the company's board had made “unreasonable” demands.

This is a fresh blow to British Energy, which rejected EdF’s bid of 680p to 700p a share earlier this week. EdF remains the only serious possible bidder and is considering its position. A decision is expected shortly.

Who else is in the running?

Although its position is highly questionable as it was viewed as a likely joint-bidder with Iberdrola, RWE of Germany is still in the running.

French utility Suez is another serious suitor but there is doubt over whether it would launch a formal offer.

The Independent says Suez has left itself the option of bidding, but will not move until it finalises its long-running merger with Gaz de France, which could take months.

Should British Energy remain independent though, it could seek joint ventures with rivals as it prepares to take part in the construction of the next generation of nuclear power stations in the UK.

It said earlier this week that it is looking at “opportunities that might be available”.

Snub

Iberdrola’s announcement is seen as a snub to John Hutton, the Business Secretary, and Alistair Darling, the Chancellor, who were only yesterday laying out Britain’s ambitious vision for the future of its nuclear industry.

Hutton said that Britain aimed to become the world’s number one location for new nuclear investment and announced a range of initiatives designed to achieve that goal.

But the withdrawal of Iberdrola, the owner of Scottish Power, has left the Government red faced and its plans for building new nuclear power stations in an uncertain position.

British Energy is 35 percent owned by the Government, which was hoping to pick up at least £4 billion from any sale.

Industry sources are still confident that a deal will proceed.