MorganEnergy

More information has been emerging about the Centrica deal to take a 25% share in the new nuclear power company being created by EdF from British Energy. EdF is buying BE through a subsidiary called Lake Acquisitions, and Centrica will take a stake in that company. According to EasyBourse:

The acquisition by Centrica would be at the same implied price per share as EDF pays for British Energy, subject to certain costs to be agreed. Under the deal EDF would retain control of British Energy through its 75% interest in Lake Acquisitions and be responsible for running all British Energy’s power stations.

Centrica’s 25% interest in Lake Acquisitions would give Centrica the right to offtake at least 25% of the uncontracted output of British Energy’s existing generation fleet. Profits of Lake Acquisitions would be distributed to EDF and Centrica in proportion to their equity interests. Centrica would also be entitled to participate in EDF’s nuclear new build activities in the U.K. on a 75/25 (EDF/Centrica) basis, with EDF leading the developments and being responsible for the building and operation of the new nuclear power stations.

It is also apparent that despite yesterday’s fanfares there are still rocks on which the deal might founder. Centrica may yet face an inquiry into the share of the UK generation market it controls with the addition of 25% of BE’s output. The Times talks about a “furious backlash” of patriotic Brits, none of whom have presumably been reading the newspapers over the past few months and have been taken completely by surprise by the news. And the Scots have finally woken up to the idea that British Energy is actually their national champion (BE’s head offices are in East Kilbride. Unfortunately for them, the SNP government has set itself firmly against any new nuclear build north of the border, so Alex Salmond is going to have to work very hard to make EdF think it worthwhile sticking around.