The German consortium planning to build new nuclear plants in the UK is negotiating a cash injection of up to €5bn in exchange for a 25 per cent stake, the FT reports, citing people familiar with the situation. Eon and RWE, which together form the Project Horizon consortium, are currently evaluating rival offers to provide the reactor designs for the plants from Toshiba of Japan, which owns Westinghouse, and France’s Areva. The proposal for an equity stake was raised during a series of meetings between the German utilities and Toshiba in London and Düsseldorf from July to discuss the financing of the project, according to people familiar with the talks. One industry source said similar discussions had taken place with Areva.
Breaking pre-market news on Tuesday,
– HSBC confirms discussions to sell US credit card and retail services business — statement. Read more
A nasty stasis in shares in E.ON, RWE and EDF at pixel time:
Breaking pre-market news on Wednesday,
– Allianz Q1 net profit €1.6bn – statement. Read more
A German consortium on Wednesday bought two UK sites for building new reactors and committed itself to a huge investment programme. RWE and Eon, two German-owned companies that are already large energy suppliers in Britain and have teamed up to build new nuclear plants, bought the sites in Anglesey and Gloucestershire in an auction held by the government’s Nuclear Decommissioning Authority.
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.
Credit market indices edged tighter on Tuesday morning, though trading volumes were minimal as there was limited corporate newsflow, traders said. This, coupled with the fact that most market participants in London remained homebound following exceptionally heavy snowfalls in the UK on Monday, dampened trading activity.
The iTraxx Crossover index of sub-investment grade names moved in by 5bp-10bp from its Monday close to stand at 1090bp-1095bp on Tuesday morning, while the iTraxx main index of investment grade companies was at 163bp-165bp, around 5bp tighter, according to traders. Read more
RWE has agreed to buy most of Essent, the biggest Dutch power company, for €9.3bn ($12.4bn), in one of the biggest deals since the onset of the credit crisis. Juergen Grossmann, RWE chief executive, described the Essent deal – his first major transaction since he took over in October 2007 – as the “perfect match”. The all-cash deal would help the German utility extend its franchise in north-western Europe and deliver about €100m in annual synergies by 2014. It will also enable RWE to tap Essent’s strong position in the wholesale gas market as well as the retail power sector in the Netherlands and Belgium.
This CDS report was written by Markit’s Gavan Nolan
European credit’s 2009 rally came to a halt today in a mixed session. The Markit iTraxx Europe was trading around 163bp, about 7bp wider than Friday’s close. But tightening credits outnumbered marginally names that widened. The underlying constituents of the main have outperformed the index since the beginning of the year, going some way to correct the large difference that opened up in December. Read more
RWE was the worst performer in broadly positive credit derivatives markets Monday morning, as the cost of protecting the German utility’s debt against default rose strongly on talk that it would announce a €10bn deal for Essent later in the day.
The company’s cost of protection jumped by 10 basis points to 81.5bp even as the main iTraxx Europe list of investment grade companies, of which it is a member, shaved off just less than 1bp to 155.4bp, meaning it now costs €155,400 per year to insure €10m of the index over five years, according to data from Markit Group. Read more
Hopes of a bidding war for British Energy were dealt a blow on Wednesday after it emerged that Vattenfall, Suez and Eon were not planning to bid for the UK nuclear group. This leaves RWE and EDF as the most likely companies to bid for the UK government’s 35% stake in British Energy, the UK’s largest generator of electricity, before the May 9 deadline. Buying this stake could trigger a full takeover of the company, which at Wednesday’s closing price of 760p, down 8p, had an equity value of roughly £12.2bn.
The latest on Friday,
– Electricite de France close to announcing offer for British Energy to beat RWE’s terms of 700 pence a share – The Times Read more
RWE, the German utility company, has made an indicative all-cash offer of close to 700p a share for British Energy, in a deal that could value the UK’s nuclear operator at up to £11bn ($21.7bn). A sale at that price would raise almost £4bn for the UK government, although the money has been earmarked for a fund to pay for the clean-up of reactor sites. RWE, which made the offer before British Energy confirmed March 17 it was in talks that could lead to a full takeover, is now carrying out due diligence.
Germany’s RWE and EDF have entered discussions with Centrica about a possible bid for British Energy, the UK’s leading nuclear generator. The talks are at an early stage, but show that the struggle for control of British Energy is gathering pace. Eon, another big German energy company, and Iberdrola of Spain have not approached Centrica but are said to be following the situation closely. Iberdrola is itself facing a possible bid from EDF. All five companies – EDF, Eon, RWE, Iberdrola and Centrica – remain in talks with British Energy about a possible bid or other co-operation. Media reports on Friday stated that EDF had emerged as a frontrunner.
Shares in Germany’s RWE gained almost 4 per cent on Friday after public radio station SWR said that EdF, its French counterpart had already visited the German government to discuss a tie-up. RWE has a market value of around €44bn.
Yes, a German regional radio station. “EDF plant Mega-Fusion mit RWE,” runs the subsequent story on SWR’s website. EdF is prepared to sell its stake in Energie Baden- Wuerttemberg to circumvent competition concerns, the report adds, naming Dresdner Kleinwort as working on the deal in an unspecified capacity and suggesting that Babcock & Brown has been lined up to take EnBW off EdF’s hands.
EDF denied on Friday that it had had any contact with the German authorities on a deal with RWE – not of course ruling out that it has been in contact with RWE itself or that it is eyeing such a deal. Read more