EDF's Board Approves 12 Billion-Pound British Energy Offer

July 31 (Bloomberg) -- The board of Electricite de France SA, the world's largest owner of nuclear power stations, approved a 12 billion-pound ($23.8 billion) offer for British Energy Group Plc, a person with direct knowledge of the decision said.

EDF may offer about 765 pence a share in cash, or a mixture of cash and securities, said two people familiar with the plan, who declined to be identified because the talks are confidential. The bid would be 5 percent above today's close of 729.5 pence and 13 percent more than the close on May 15 before British Energy said it received approaches.

The Paris-based utility, which already has 7.9 million customers in the U.K., will get eight U.K. atomic plant sites with potential for building new reactors. The U.K. government, which owns a 35.6 percent stake, wants investment in new nuclear plants and is identifying sites for reactors.

``For EDF, it's a wholly logical step,'' said Ingo Becker, an analyst at Kepler Equities in Frankfurt, in a telephone interview today. ``The U.K. is one of the few countries in Europe encouraging new nuclear build.''

Electricite de France, which announces earnings tomorrow, will hold a press conference in Paris at 8:45 a.m. local time. Francois Molho, a spokesman for the company, declined to comment on the reason.

The French utility will have to give up control of some of sites owned by the East Kilbride, Scotland-based British Energy, two people familiar with the plan said yesterday.

Nuclear Sites

U.K. Energy Minister Malcolm Wicks said in a Bloomberg Television interview on April 17 that Britain is wary of a monopoly company or business group having control of all new nuclear power stations in Britain.

Prime Minister Gordon Brown said on June 22 in Saudi Arabia that he backs new atomic plants. In 2007 nuclear reactors produced 19 percent of the U.K.'s power. While Brown favors the technology because it emits less carbon dioxide, the gas blamed for global warming, than natural gas and coal-fed stations, he hasn't set a growth target for the industry.

A report produced for the government by Jackson Consulting recommended that any new capacity should be developed first at one of the country's existing nuclear sites. Those are owned by British Energy and the U.K. Nuclear Decommissioning Authority, an agency set up to run and clean up older plants.

Those locations already have the necessary road and rail links, access to water and grid connections, and local communities may be more likely to have the required skills.

New Capacity

``There is no guarantee that EDF will have exclusive use of the sites,'' said Florence Roche, a fixed-income credit analyst at Societe Generale SA in Paris. Without that exclusivity, it makes the deal even more expensive, she said yesterday. ``At the level of valuation reported by press, the assets are not very attractive.''

EDF recently bought land adjacent to the Wylfa power station, owned by the Nuclear Decommissioning Authority, as a backup plan in case it misses out on British Energy. The French power producer has said it wants to build as many as five nuclear reactors in the U.K.

British Energy in November signed an agreement with the national grid operator to connect six new nuclear reactors on four southern England sites to the country's power transmission network from 2016.

Centrica Plc may acquire about 25 percent of British Energy as part of the transaction, the people said.

Shares Rise

EDF rose 1.66 euros, or 3.1 percent, to 55.95 euros in Paris trading. British Energy rose 9.5 pence, or 1.3 percent, to 729.5 pence in London.

The Financial Times reported today that part of the EDF bid will be in the form of contingent value rights, securities which have future payouts dependent on the performance of British Energy after it has been taken over. It said these securities are less well-known to U.K. investors than to those in the U.S. and continental Europe, and may complicate negotiations.

The Financial Times said EDF's proposed bid includes an all-cash version which would be at a lower value than an alternative offer of cash plus CVRs. Dow Jones reported today that EDF's mixed offer of cash and securities would be 700 pence a share plus CVRs, as an alternative to a 765 pence cash bid.