Higher price hopes as Energy race hots up

UK nuclear energy giant British Energy could be sold for more than expected, the company revealed today, sending the shares up sharply.

A statement on the progress of takeover talks indicated that at least two parties have made proposals higher than the 680p a share the market has so far anticipated as the top price.

One of those is understood to be French state-owned electricity group EDF. It is thought to have bid at least 700p, valuing the company at £11 billion. One other bidder, perhaps Germany's RWE or Suez of France, has also expressed a keen interest but has yet to name its price.

The shares today jumped 36p to 716p. The suggestion EDF may not have made the highest offer is good news for shareholders, which include the UK Government with a 35% stake. British Energy is vital to the UK's energy interests - its eight nuclear and one coal-fired power station generate a sixth of the nation's energy needs.

But the Government has indicated it is willing to sell at the right price. The auction is being led by chairman Sir Adrian Montague with advice from bankers at Rothschild. It had attracted criticism for failing to generate sufficient interest in a prime asset.

The company said: "The board has reviewed the proposals and has decided that discussions should continue with all the parties concerned."

It added that each of the putative offers "requires further development", and that the sale talks will continue for at least a "number of weeks".

The Government would like to see the matter resolved by the time Parliament rises in July because it wants to started building a new generation of nuclear sites. Analysts say it is unlikely any one bidder will take control of the whole company, because the competition authorities would not allow it.

A joint bid, perhaps involving British Gas owner Centrica, is seen as more plausible. Consumers groups are worried a foreign owner will ratchet up energy costs for already hard-pressed consumers.