Centrica to buy stake in British Energy

Centrica is to buy a 20 per cent stake in British Energy - whose acquisition by France's EDF was completed earlier this year - for £2.3 billion, the companies said yesterday.

As part of the deal between the two companies, EDF will also buy Centrica's 51 percent stake in Belgian generation and supply business SPE for €1.3 billion.

Centrica, which owns British Gas, said the acquisition of the British Energy stake helps it enter the nuclear sector and is part of its strategy to boost upstream assets and protect itself against volatile energy markets.

Centrica said that the cash obtained from the sale of its stake in SPE would also strengthen its balance sheet and give it scope for further deals.

"The deal represents good value for Centrica shareholders, improves the strategic balance of our business and further underpins our green energy credentials," Centrica chairman Roger Carr said in a statement.

"The attractive price secured for the sale of SPE will help preserve our balance sheet firepower as we focus the group on growth opportunities in the UK and North America," he added. EDF said that buying control of SPE would make it the second-largest generator in Belgium. The deals are expected to be completed towards the end of the third quarter.

EDF will continue to operate British Energy, while Centrica will have board representation at the UK nuclear power group.

Centrica will also assume 20 per cent of the liability for contingent guarantees given by EDF in respect of the contingent value rights issued as part of its acquisition of British Energy.