Electricite de France SA Chairman Pierre Gadonneix said the deal was "a major step in EdF's development," by "consolidating our leadership in nuclear power globally, and consolidating our development in the UK."
The deal -- which has been accepted by British Energy's top two shareholders -- comes after EdF sweetened a bid that the British company had rejected in July. EdF is offering 774 pence for every ordinary share of British Energy -- an increase of nine pence per share from its July bid.
The takeover would bring more French nuclear expertise to Britain, which has been looking to diversify its energy mix. France gets about 80 percent of its energy from nuclear plants -- the highest percentage of any major industrialized country.
Businesses and government officials across the European Union want greater energy independence and less reliance on oil and coal that pollute the air. The 27-country bloc has set a goal of reining in its greenhouse gas emissions by 20 percent by 2020, and nuclear power is one way to possibly achieve that target.
The British government, which owns 36 percent of British Energy, said the deal -- one of the biggest foreign direct investments in Britain -- would diversify the country's energy sources, create jobs and help manufacturers.
"This deal is good value for the taxpayer and a significant step towards the construction of a new generation of nuclear stations to power the country," British Prime Minister Gordon Brown said in a statement.
"Nuclear is clean, secure and affordable; its expansion is crucial for Britain's long-term energy security, as we reduce our oil dependence and move towards a low-carbon future," he added. WestLB Research analyst Peter Wirtz said the deal was a good one strategically for EdF, by better balancing the group's generating capacity in Britain.
Currently EdF's British subsidiary is heavily weighted to coal power, which represents 80 percent of its installed capacity. British Energy is even more heavily dependent on nuclear power, which accounts for 83 percent of its installed capacity. Together, nuclear power will represent 58 percent of the combined group's capacity, and coal power 36 percent.
In Paris trading on Wednesday, shares of EdF rose 4.4 percent to 52.35 euros ($77.12). In London, shares of British Energy climbed 6.2 percent to 769 pence ($14.26).
The deal would create Britain's largest power company measured by generating capacity, with 16.5 gigawatts of installed capacity. British Energy is already Britain's biggest electricity producer.
British Energy's two largest shareholders, the British government and investment fund Invesco, have both pledged to tender their shares in the offer. Along with other pledges from British Energy board members, EdF said it has won approval from shareholders representing a total of 45 percent of British Energy's capital.
Also Wednesday, Centrica PLC, Britain's largest gas supplier, said it was in talks with EdF about an option for Centrica to take a 25 percent stake in the company after the EdF-British Energy deal is completed. Centrica said it would be at the same price paid by EdF for British Energy -- 774 pence a share.
Shares of Centrica were flat at 330 pence ($6.12). British Energy chairman Sir Adrian Montague said his company spent the past six weeks working with EdF to seal a deal.
"This new transaction is regarded by the board as good for the shareholders, good for our staff, good for the nuclear industry and also good for the country," Montague told BBC Radio 4.
"In the short term I think you will find a stronger supplier of energy in the U.K. as we bring together British Energy's generating capability with EDF's strength of the supply business," Montague said.
The British government said EdF had agreed to continue operating British Energy's eight existing nuclear power stations as well as invest in four new reactors.
EdF, which is owned 85 percent by the French government, aims to complete the deal by the end of this year or early 2009. The deal requires the approval of shareholders and regulators.
Dougie Rooney of the British union Unite welcomed the deal, saying the union's job now was to make sure that EdF kept existing plants open and maintained investment.
Anti-nuclear campaigner Greenpeace criticized the deal, saying it would do nothing to promote British energy security or tackle climate change.
"Just yesterday Gordon Brown promised the U.K. a million green-collar jobs in the manufacturing sector, but his push for nuclear power has led to a deal which will benefit the French taxpayer and create French jobs," said Nathan Argent, head of Greenpeace's nuclear campaign.
The French power company has been looking to gain access to new nuclear sites in Britain, which has announced plans to invest billions to develop renewable energy sources -- including nuclear.
EdF is already present in Britain via its EdF Energy subsidiary, which employs 13,000 people and handles 5.5 million customer accounts. It operates two coal-fired power stations as well as a natural gas-fueled power plant.
British Energy has one coal-powered station in addition to its eight nuclear power stations.
The British government has a target of generating 10 percent of electricity from renewable sources by 2010 and 15 percent by 2020. It has emphasized the importance of a new generation of nuclear power stations in meeting a broader target to cut carbon dioxide emissions by at least 60 percent of 1990 levels by 2050.
EdF is also in the midst of another buyout bid: It has offered to purchase U.S. wholesale power supplier Constellation Energy Group Inc. in hopes of overturning a deal Constellation made last week to be sold to Warren Buffet's MidAmerican Energy Holdings Co.
EdF's Gadonneix said that should the Constellation offer fail,
he is "open" to working with other U.S. partners.
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