EU gives approval for EDF to buy British Energy Group

ELECTRICITE de France SA, Europe's biggest power producer, yesterday won conditional European Union antitrust approval to buy British Energy Group Plc for 12.5 billion pounds (US$18.7 billion).

The European Commission, the 27-nation European Union's regulator in Brussels, announced its endorsement in a statement reported by Bloomberg News. The approval is dependent on EDF's agreement to sell two non-nuclear power plants in the UK, "minimum volumes of electricity" in the British wholesale market and land on which a new reactor may be built.

The Paris-based utility, the world's biggest operator of nuclear plants, agreed in September to buy British Energy to become the UK's largest power producer and gain control of eight atomic stations. The purchase will add commercial clients to the 5 million households supplied by EDF's UK unit.

EDF fell as much as 2.4 percent to 40.65 euros (US$56.86) in Paris trading, and was at 40.70 euros as of 11:12am local time. British Energy dropped 0.3 percent to 767.5 pence in London.

"Although the combined entity would not have extremely high market shares, the commission found during its investigation that the transaction, as initially notified, would have been likely to raise serious competition concerns in four main areas," the commission said.

The decision is conditional upon EDF's commitment to divest the 790-megawatt gas-fired Sutton Bridge plant, owned by EDF Energy, and another at Eggborough, a 1,960-megawatt coal-fired station owned by British Energy. Bondholders have an option they can exercise next year, which they got as part of a 2002 deal that prevented British Energy from collapsing.

The commission also asked EDF to unconditionally divest a site potentially suitable for building a new nuclear station located at either Dungeness or Heysham in Britain, and to end one of the merged entity's three grid-connection agreements with National Grid Plc at Hinkley Point in the UK.