British Gas owner may merge with UK nuclear operator after EDF takeover talks stall

British Gas owner Centrica has said it may consider merging with nuclear operator British Energy.

French energy giant EDF had been expected to buy British Energy for £12bn on Friday, in a move that would have paved the way for work to start on new nuclear power stations in the UK, but talks have stalled over the price.

The government owns 35% of British Energy, and wants the operator to start building new power stations as the lifespan of its existing stations comes to an end.

Centrica also said yesterday that it was talking to an unnamed third party about taking a minority stake in British Energy if that party bought the nuclear operator. But it has not ruled out other options, including a merger.

However, the firm said in a statement: “There can be no certainty that an offer for British Energy will be made nor as to the terms of any such offer.”

Two of British Energy's largest private shareholders - Invesco and Prudential - are reported to be seeking a higher offer from EDF of nearer £10 a share, compared with the 765p a share offer EDF that has proposed.