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Centrica buys 20% stake in British Energy

British Gas owner Centrica has bought a 20% stake in EDF’s nuclear business - formerly British Energy - for £2.3bn while EDF has reciprocated by buying a controlling stake in Centrica’s Belgian supply business SPE for £1.2bn.

The deal will make Centrica an equity stakeholder in EDF’s existing and any future nuclear business in the UK

EDF and Centrica will also form an 80/20 joint venture to pursue a planned programme to build four new nuclear power stations in the UK. Finally, the EDF Group will acquire Centrica’s 51%. stake in Belgian generation and supply business SPE.

Centrica’s bid will invest £2.3bn for the 20% in Lake Acquisitions, the vehicle through which EDF acquired British Energy, 6% less than the price EDFoffered in January, which also gives Centrica 20% of the company’s liabilities.

Chairman and Chief Executive of EDF, Pierre Gadonneix, said: “This transaction, part of the group’s strategy of developing its positions in Europe, will enable leading British generator, Centrica, alongside EDF, to take part in the re-launch of nuclear energy in the United Kingdom through an industrial partnership in a form already pioneered by EDF in China and the US.

“This transaction will also help balance both the generation and supply businesses of EDF Energy. The asset swap in this deal will also see the EDF group reinforce its Benelux presence by becoming the second-largest generator in Belgium,” he said.

Centrica will have a 20% stake of the available power from the British Energy fleet, and buy 18TWh of power at market prices over five years from 2011.

The companies plan to construct, operate and decommission four European Pressurised Reactors, designed by Areva. Two reactors are under construction - one at Flamanville on the north French coast, and a second at Olkiluoto in Finaland.

Chairman of Centrica, Roger Carr, said: “The deal represents good value for Centrica shareholders, improves the strategic balance of our business and further underpins our green energy credentials.

“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 said.

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