Spare a thought for the heads of French public companies who are having to dig deep and find their inner patriot after the new Socialist government issued guidelines limiting CEO pay to 20 times that of the lowest paid worker.
Just a day later Henri Proglio, chief executive at power group EDF, has apparently agreed to what amounts to a 70 per cent pay cut. He earned €1.6m last year – 65 times more than his lowest-paid worker. Read more
– By Neil Collins –
I’m a shareholder in Alliance Trust. Its subsidiary, Alliance Trust Savings, is home to my (substantial) SIPP. The service from ATS is simple, cheap and exemplary, and I’d recommend it. I wouldn’t recommend the shares to anyone until the management can persuade me they know what they’re doing. Read more
Anne Lauvergeon, the combative head of Areva, is to quit the nuclear group she forged more than a decade ago as the French government strengthens its hold on the management of its nuclear champion, reports the FT. Lauvergeon, known as “Atomic Anne” and often cited as one of the world’s most powerful businesswomen for her role at the head of France’s nuclear engineering and uranium mining group, will be replaced by Luc Oursel, a board member. Lauvergeon’s departure marks a victory for her bitter rival Henri Proglio, head of Areva’s biggest client, state utility EDF. The two have, over the past 18 months, conducted a bitter public feud with Proglio arguing that Areva, which is majority state-owned, should be broken up.
A nasty stasis in shares in E.ON, RWE and EDF at pixel time:
The initial equity reaction to Japan’s tri-catastrophe crisis (earthquake, tsunami, nuclear disaster fears).
In Japan the Nikkei is down over 6 per cent: Read more
Eon, the German power company, is in advanced talks to sell Britain’s second-largest electricity distribution network to a foreign consortium for up to £3.5bn ($5.6bn), reports Reuters citing the Sunday Times. The report said a group comprising the Abu Dhabi Investment Authority, Canada Pension Plan and Australian bank Macquarie had approached Eon about the business, made up of the former Midlands and East Midlands Electricity companies. The consortium made the approach for Eon Central Networks recently and talks advanced quickly, the report added. German magazine Der Spiegel reported on Saturday that Eon was considering the sale of several assets to make up for deteriorating earnings.
Breaking pre-market news on Friday,
- British Airways pre-tax loss increases to £164m from £148m – statement. Read more
EDF of France is set to sell its UK electricity networks business to Cheung Kong Infrastructure, controlled by Hong Kong billionaire Li Ka-shing, for £5.8bn, 45% more than the price originally suggested in the deal, reports the FT. EDF is expected to announce the sale with its half-year results on Friday morning. The deal at a stroke reaches the €5bn target the French state-controlled utility set for disposals by the end of 2011. CKI outbid a consortium of Australia’s Macquarie, the Abu Dhabi Investment Authority, and Canada Pension Plan. For CKI, one analyst told Bloomberg, the deal gives it a sizeable overseas asset with good returns.
EDF on Monday announced the sale of a 20% stake in British Energy to Centrica of the UK, in a deal that would value the French group’s recently acquired nuclear operator at close to 6% less than the £12.4bn it paid last year. Centrica will pay £2.3bn for a smaller stake in British Energy than expected. It had agreed to take a stake of up to 25%, but came under fire from some shareholders concerned that it could be over-paying.
The UK government could make more than £400m in the hotly-contested auction of land to build nuclear power stations, as skyrocketing prices on Tuesday forced out one of the three main bidders. The consortium of Spain’s Iberdrola, French utility GDF Suez and Britain’s Scottish and Southern Energy quit the race, leaving EDF of France and the German partnership of RWE and Eon to continue in a bid process launched almost two months ago.
We’ve all become accustomed to hearing what Opec may or may not think is a fair price for oil (even though officially they do not comment). But, when it comes to the oil majors – traditionally – they have skirted the question. Most likely this is because they recognise it is just not good PR, sitting as they do on the price taking side of the equation.
Considering the above we noted with interest the following Bloomberg headline on Thursday: Read more
Centrica, owner of British Gas, hopes to agree a deal by the end of next month to take a 25% stake in British Energy for about £3.1bn, after EDF of France gained approval from Brussels to buy the owner of most of the UK’s nuclear power stations. The European Commission on Monday approved EDF’s £12.5bn bid for British Energy, subject to conditions including the sale of two fossil-fuel power stations and a promise to auction some of its nuclear power stations’ output on the open market.
Constellation Energy on Wednesday opted for the risks of an independent future over the certainty of ownership by US billionaire Warren Buffett, after agreeing to sell 50% of its nuclear business to its top shareholder, EDF of France, for $4.5bn, spurning the rival $4.7bn bid from Buffett’s MidAmerican Energy. But both Moodys and S&P cited concerns of continuing pressures on Constellation’s liquidity, prompting Moody’s to downgrade Constellation to Baa3, while S&P said it remained on Creditwatch.
Warren Buffett, the US billionaire investor, could bow out of the battle for Constellation Energy after his MidAmerican Energy utility group said it would not try to outbid EDF of France. Constellation’s directors were due to meet Tuesday to decide whether to accept a $4.5bn offer from EDF for 50% of its nuclear power generation business or go with MidAmerican’s rival lowball $4.7bn offer the whole group.
Warren Buffett’s grip on Constellation Energy appeared less certain Wednesday after EDF, France’s state-controlled energy group, launched a final bid to preserve its strategic position in the US with a rival $4.5bn offer for 50% of its partner’s nuclear assets.The French group made the offer despite investor concerns about the rising costs of its nuclear investments that have weighed on its shares in recent months. In an investor presentation in London on Thursday, the group is expected to say that the oil price would have to rise past $60 a barrel to make investment in new US power stations profitable. But EDF is determined not to lose its head start in the US, built on its Unistar joint venture to build four EPR reactors on the US group’s sites. EDF also has a 9.5% stake in the US utility. The French group on Wednesday wrote to the Constellation board offering to pay $4.5bn if the power group agreed to inject half of its nuclear fleet into the joint venture.
French nuclear operator EDF has abandoned its plans to counterbid for Constellation Energy to wrest the US utility away from current acquirer Warren Buffett, blaming credit turmoil for its decision. The move severely sets back EDF’s ambitions in the US, potentially the world’s most lucrative civil nuclear market. Baltimore based Constellation, which controls three nuclear facilities, agreed to a $4.7bn takeover by Buffett’s Mid-American Energy last month after fears about its liquidity drove down its shares and threatened its credit ratings. Constellation quickly committed to Buffett despite at least two other takeover offers, including one from EDF that was 33% richer. EDF, as it evaluated a new joint bid with US buyout firm KKR, had intended to make an offer ahead of an upcoming Constellation shareholder meeting, in the hope that Buffett’s proposal would be voted down. Its decision to abandon the bid now throws the future of Unistar – EDF’s joint venture to build four reactors with Constellation – into question. EDF had been considering whether instead to try to buy Constellation’s half-stake in Unistar to take control of the venture – an idea it has not ruled out, say people close to the company.
EDF, the French electricity and nuclear power group, is nearing a deal with private equity group KKR that it hopes could trump billionaire investor Warren Buffett in his agreed $4.7bn takeover of US-based Constellation Energy. Pierre Gadonneix, EDF chief executive, will meet KKR executives this week to finalise details of a fresh assault on the company it had chosen as a bridgehead into the US nuclear energy business. It owns 9.5% of Constellation and has a 50:50 joint venture and agreement with the east coast utility to build four reactors. EDF, which recently clinched an agreed €15.7bn offer for British Energy, plans to convene a board meeting in the next two weeks to approve a revived approach with KKR. The group is hoping that Buffett will be forced to bow out as pressure mounts on Constellation’s board to consider other offers.
Paralysis in the bank lending market is threatening some of the world’s largest potential takeovers, as investors watch to see whether the proposed $700bn US financial rescue plan can stop certain transactions from falling apart. Acquirers that would have used two or three banks to finance deals in the credit boom have been putting together groups of two to three times that size. The latest turmoil, which erased Lehman Brothers and Merrill Lynch from the global pool of lenders, has intensified concerns. France’s EDF recruited three more banks last week on top of the four that had agreed to arrange finance for its £12.5bn takeover of British Energy. Several companies abandoned bids last week. A private equity consortium withdrew its £1.9bn bid for Informa, the UK information and events company, after failing to raise finance for a sweetened offer, and HSBC walked away from its $6.3bn offer for 51% of Korea Exchange Bank. Investors are now focusing on whether Teck Cominco, the Canadian mining company, can lock down financing for its $13.9bn deal to buy Fording Canadian Coal, and whether Xstrata can raise a $15bn loan to finance a formal offer for Lonmin.
On FT Alphaville this morning,
- Man Group – restrictions on short selling are affecting the equity long/short style – statement Read more
EDF will take the lead role in development of nuclear power in Britain with the £12.4bn agreed takeover of British Energy, the nuclear generator. EDF has also signed an MoU for Centrica, owner of British Gas, to take a 25% stake in British Energy, although that deal is not likely to be signed for several months. The takeover of British Energy, to be launched on Wednesday in Paris, is EDF’s biggest international expansion and will give it almost all the UK’s nuclear power stations and control over key sites for building more, putting it in pole position for the planned revival of the UK’s nuclear industry. However, the French group has also agreed to sell some of British Energy’s land in Essex, and possibly in Kent or Lancashire, for other companies such as Eon and RWE of Germany to use for building reactors. EDF won over British Energy’s board by raising its bid from the offer that was rejected by top institutional shareholders end-July. The new offer is 774p per share in cash, 9p higher than in July.
Warren Buffett’s MidAmerican Energy on Monday injected $1bn in cash into Constellation Energy, its beleaguered takeover target, as EDF, Constellation’s French partner, considered whether to try to break up the deal with a higher bid. Constellation, whose shares plummeted last week over concerns about liquidity in its commodities trading operation, reached a definitive agreement on Friday to be bought by MidAmerican, an energy company that is 88% owned by Warren Buffett’s Berkshire Hathaway. The $4.75bn deal was heralded by some investors as a way for Constellation to gain badly-needed liquidity in the form of $1bn in cash that MidAmerican agreed to quickly pay in return for preferred equity. But EDF said Monday it had been willing to make a higher offer at $35 per share, including a $1bn cash infusion, although it could have taken weeks. Mayo Shattuck, Constellation chief, said Buffett’s offer, at a lower $26.50 per share, was accepted because it provided “immediate liquidity” and the best probability for regulatory approval.
Warren Buffett has made his first move in the latest round of credit market turbulence by agreeing to buy $4.7bn Constellation Energy Group, a US power company whose shares have been hammered over fears of a lack of liquidity in its commodities trading business. MidAmerican Energy, a holding company of energy assets that is majority-owned by Buffett’s Berkshire Hathaway, agreed on Thursday to buy Constellation for $26.50 a share – at less than half the company’s market value a week ago. Constellation had been scrambling since Tuesday to find a buyer or secure an emergency capital infusion, as it struggled to convince investors that its commodities trading operations and creditworthiness were stable. It seemed likely on Wednesday that MidAmerican would buy Constellation. But momentum swung quickly toward a $500m capital infusion from EDF, the French power group that owns a 9.51% stake in Constellation. Ultimately, EDF said conditions were “not met” for a deal to buy Constellation, leaving the way open for MidAmerican. Constellation said it will issue $1bn of preferred equity to MidAmerican at a yield of 8% as part of the deal.
EDF is preparing finally to seal a sweetened £12bn offer for British Energy, the nuclear operator. British Energy’s board on Monday concluded it expected to be able to recommend the EDF offer. However, some technical issues remain to be resolved and the deal could still collapse again as it did in July. The move came as EDF considered a bid for Constellation Energy, its US partner. The French group’s board met in Paris Wednesday to discuss the group’s options for further investment in the US, where its partner’s shares have crashed in recent weeks. EDF this month doubled its stake to 9.51% in Constellation, which was to have been its entry into the potentially lucrative relaunch of the US nuclear sector. Insiders said EDF had not yet decided whether to bid for the group, which has an estimated enterprise value of $10bn. Constellation on Wednesday confirmed it was in advanced talks with a potential buyer, and an announcement on a takeover or asset sale could be near.
Electricité de France is moving closer to a deal to buy British Energy, the nuclear generator, after progress in talks with some of the UK company’s top investors. The French utility, whose £12bn bid was rebuffed by British Energy’s shareholders in July, has offered to boost the potential pay-out under its alternative cash-and-paper bid depending on the UK company’s future performance. Negotiations are still at an early stage with British Energy’s investors, which include Invesco Perpetual, its second-biggest shareholder with a 15% stake, and people close to the talks say they could still fail. M&G, the group’s third-largest investor with 7% of the shares, said it had not had discussions with EDF. However, the sharp fall in oil prices in the past month appears to have convinced some shareholders to be more flexible in their demands on price.
M&G, one of the biggest shareholders in British Energy, on Wednesday denied it had reached agreement with Electricité de France over an improved offer for the nuclear generator. Its comments, to the FT, followed speculation that EDF had talked to British Energy’s two biggest shareholders – M&G and Invesco Perpetual – on Tuesday night. M&G, which is part of the Prudential insurance group and one of the UK’s biggest investors, owns about 7% of British Energy. Last month M&G and Invesco, British Energy’s biggest institutional shareholder, forced EDF to scrap plans for a 765p-a-share cash bid, arguing it undervalued the company. The two institutions between them hold 22%. Dow Jones reported Wed, and the WSJ reports Thursday, that EDF had agreed with the two funds to sweeten its £12bn bid.
Centrica, owner of British Gas, has considered adding a cash element of about £4bn to its potential bid for British Energy in order to surmount objections from the UK government, which owns 35% of the nuclear group. Centrica is waiting to see if EDF, the French energy group, can work out a deal to buy British Energy, in which Centrica would then participate through the purchase of a minority stake. But if EDF and British Energy fail to agree, Centrica is keen to mount its own bid. EDF’s £12bn cash bid for British Energy was pulled at the last minute earlier this month after two of British Energy’s largest institutional shareholders – Invesco and M&G – rejected the 765p a share offer as too low.
The UK government would block any attempt by Centrica to merge with British Energy, the nuclear group, after the owner of British Gas said it was considering the idea. Centrica said Monday it would pursue a merger with British Energy if a £12bn ($23.5bn) proposed takeover by EDF of France does not go ahead. After media speculation prompted the UK Takeover Panel to demand a statement, Centrica confirmed it was in talks with “a third party”, known to be EDF, about taking a minority ownership position in British Energy if EDF’s takeover goes ahead. If EDF’s offer does not succeed, Centrica said it would look at alternatives, including “a possible merger” with British Energy. But a UK official said any deal would require the approval of the state, which owns 35% of British Energy, which believed the nuclear group needs more “technical expertise” than Centrica could provide.
Centrica, owner of British Gas, plans to revive the idea of an all-share merger with British Energy if EDF’s proposal to buy the UK nuclear group falls through, reports the FT. EDF’s plan to buy British Energy was thwarted at the 11th hour last week when Invesco and M&G, two of British Energy’s largest shareholders, rejected EDF’s bid of 765p a share, or about £12bn, as too low. After recriminations on Friday about the sudden collapse of the deal, it remained unclear whether EDF would return with a higher offer. The Times reports that the UK government, which holds a 36% stake in British Energy, is expected to put intense pressure on EDF to improve its offer, but that one official said interest in a possible bid from RWE and Eon, both of Germany, and Iberdrola, of Spain, was “live”.
EDF’s attempt to become the UK’s biggest power generator was on Thursday night in tatters after its offer to buy British Energy, the UK nuclear group, fell through just hours before a deal was due to be announced, reports the FT. The French group had been preparing to unveil on Friday an agreed takeover bid worth about £12bn, the culmination of a tortuous negotiation process. A member of EDF’s board confirmed Thursday it had put an offer to British Energy’s board late Thursday. The offer comprised two options – 765p per British Energy share in cash, or 700p per share in cash plus a “contingent-value rights component” that would pay out if British Energy performs in line with its targets. But in a surprise late development, it appeared that British Energy’s board rejected the offer. Dow Jones reported that investor demands may have led to the breakdown.
A financial instrument unfamiliar to the London stock market forms a central part of the proposed bid by EDF for British Energy, creating an extra complication that could hold up a deal. Advisers are working to secure an agreement, which they hope to announce Friday. EDF’s board will meet Thursday to approve its results, also due Friday, and plans also to formally approve the bid. The bid is expected to value British Energy at about £12bn but an important component of the planned offer is in contingent value rights: securities that have future pay-outs dependent on the company’s performance after its take over. Although CVRs are well-known in the US and continental Europe, they are not so familiar to UK investors, and concerns on valuations could hold up an agreement.