Centrica of the UK and EDF of France are at loggerheads over the planned sale of a 25 per cent stake in British Energy, the nuclear generator bought by EDF last year for £12.4bn ($18.2bn).
Last summer, the two companies reached a non-binding agreement that Centrica would buy the stake for £3.1bn, putting the same value on British Energy as was paid by EDF.
Since then, electricity prices have fallen sharply, cutting expectations of British Energy's revenues, and Centrica has come under pressure from shareholders not to overpay.
Centrica has also given itself an option of an alternative deal by taking a stake of 23.6 per cent in Venture Production, the North Sea gas and oil company.
EDF and Centrica said yesterday the talks over British Energy were still continuing.
However, both sides had set the end of March as their target for reaching an agreement.
Centrica has identified the British Energy deal as a strategic priority, part of its drive to increase its upstream assets producing gas and electricity.
Some shareholders, although supportive of the strategy, have raised concerns about the price.
Sam Laidlaw, Centrica's chief executive, told the Financial Times in February: "The question is: can we do a deal for value? And we are clearly focused on that."
EDF wants to stick to the agreed price, although an agreement could include side deals such as Centrica taking stakes in sites for new nuclear development, or selling its 51 per cent stake in SPE of Belgium to EDF.
Although Centrica's move on Venture has so far been rebuffed by its management, a bid that could be worth about £1.3bn would be another way for Centrica to add to its upstream business.
EDF is under pressure to bring down its debt, running at near record highs after the deals last year to buy British Energy and a stake in the nuclear assets of Constellation in the US.
People close to the governmentadmit the French state-controlled group may have stretched itself on British Energy, setting the price in August just before the collapse of Lehman Brothers.
"Constellation was risky but not stupid," said one presidential adviser. "On British Energy they did pay a bit too much."
Last summer, the two companies reached a non-binding agreement that Centrica would buy the stake for £3.1bn, putting the same value on British Energy as was paid by EDF.
Since then, electricity prices have fallen sharply, cutting expectations of British Energy's revenues, and Centrica has come under pressure from shareholders not to overpay.
Centrica has also given itself an option of an alternative deal by taking a stake of 23.6 per cent in Venture Production, the North Sea gas and oil company.
EDF and Centrica said yesterday the talks over British Energy were still continuing.
However, both sides had set the end of March as their target for reaching an agreement.
Centrica has identified the British Energy deal as a strategic priority, part of its drive to increase its upstream assets producing gas and electricity.
Some shareholders, although supportive of the strategy, have raised concerns about the price.
Sam Laidlaw, Centrica's chief executive, told the Financial Times in February: "The question is: can we do a deal for value? And we are clearly focused on that."
EDF wants to stick to the agreed price, although an agreement could include side deals such as Centrica taking stakes in sites for new nuclear development, or selling its 51 per cent stake in SPE of Belgium to EDF.
Although Centrica's move on Venture has so far been rebuffed by its management, a bid that could be worth about £1.3bn would be another way for Centrica to add to its upstream business.
EDF is under pressure to bring down its debt, running at near record highs after the deals last year to buy British Energy and a stake in the nuclear assets of Constellation in the US.
People close to the governmentadmit the French state-controlled group may have stretched itself on British Energy, setting the price in August just before the collapse of Lehman Brothers.
"Constellation was risky but not stupid," said one presidential adviser. "On British Energy they did pay a bit too much."
Source: The Financial Times
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