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Bids for a stake in British Energy
The deadline for bids for a stake in British Energy was 9 May 2008, at which time EDF (the French state-controlled utility) was the sole bidder. Since that date, two further bidders have put forward proposals. These are two utilities RWE (German) and Iberdrola (Spanish) who submitted a joint proposal and Suez (the French industrial group), which it is believed is more interested in a collaborative deal to help construct new nuclear power plants in the UK. (The Times, 17 May 2008)
British Energy operates eight nuclear power stations in the UK and also runs a coal-fired power station. The company said it had reviewed the proposals and decided that talks should continue with all bidders. A spokesman said: ‘The board wishes to stress that each of the proposals requires further development and that the process is therefore likely to continue for a number of weeks.’ (BBC News, 16 May 2008)
Industry sources believe that EDF remains the most credible bidder. Its offer is the furthest advanced. The Government is insisting that any buyer of British Energy would have to sell some key sites to ensure proper competition. (The Times, 17 May 2008)
The Government wants to stimulate a competitive auction for British Energy, which it expects to play a key role in the push to build a new generation of nuclear plants in the UK. It wants to use the sale of its 35% stake in the company to kick-start the construction programme for new reactors in Britain. (The Times, 17 May 2008)
See two connected Times 100 case studies:
- RWE npower is an integrated energy company. It is the third largest supplier of electricity through its npower brand and one of the largest electricity generators. It is part of the RWE Group, which is one of the largest European energy Utilities. Energy companies have a responsibility to maintain supplies of energy 24/7.
- The Nuclear Decommissioning Authority (NDA) was set up by the government and started to operate in April 2005. Its purpose is to manage a UK-wide plan to clean up existing public sector nuclear sites. This case study shows how the NDA is working to a well-organised planning framework to achieve its objectives.
Sources:
The Times Online - Takeover battle at British Energy hots up, 17 May 2008
BBC News - British Energy mulls bid offers, 16 May 2008
The Times 100 Edition 12 Case Studies - NDA, The business of nuclear decommissioning
Potential Study Questions:
- Define ‘fair competition’ in a market. Give two examples of unfair competition.
- What are the main features of a very competitive market?
- What are the main features of a monopoly?
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