Iberdrola seeks nuclear option in UK – but BE price too high

SPANISH energy company Iberdrola said it wants to invest in the UK nuclear industry – but came close to ruling out a bid for British Energy at the current price.

The company, which took control of Scottish Power last year, said that it has ambitions to build the next generation of nuclear power plants in the UK.

But it is thought that the current price being demanded by Torness Power Station owner British Energy is too high.

BE has attracted some of Europe's largest utilities firms in a fierce bidding war since confirming in March it was in talks that could lead to a takeover.

Although the Scottish Power owner will not formally rule out a bid, its strategy chief Jose Luis del Valle said the focus is more on other possibilities for developing nuclear power plants in the UK.

He said: "What we are interested in is the future, the future development of nuclear in the UK is something that is clearly of interest to us."

"There might be opportunities if someone else buys British Energy, there might be sites become available, from British Energy or sites from the nuclear decommissioning authority, there will be other opportunities in the UK for nuclear besides British Energy."

Iberdrola's chairman and chief executive, Ignacio Sanchez Galan, said his company was obliged to look at opportunities.

But he added that any deal would only happen if he could guarantee shareholders it would increase earnings per share.

He said: "We are already in the UK and the UK is an important market for us, so we are obliged to consider each and every opportunity in the market."

German power firm RWE and British Gas owner Centrica are thought to have put in bids for British Energy.

EDF, the French utility company said to be close to making an offer for British Energy, has also been attributed with an interest in taking over Iberdrola itself.

The Scottish Power owner has been at the centre of speculation that the French firm is to make a bid, possibly in partnership with Spanish builder and Iberdrola's largest shareholder Actividades de Construction y Contratas (ACS).

But Mr Galan has set a high price for his company, hinting that its take-out price is close to double its current market capitalisation. The company is said to be worth around £80.4 billion. "If EDF can find the resources we would be delighted to analyse the bid," said Mr Galan.

"But any takeover proposal would have to boost earnings and cashflow per share, Galan insisted.

He added: "If you want to make a bid, make it.

"Otherwise, keep quiet."

Scottish Power generated around a quarter of 2007 earnings at Iberdrola, more than £1 billion, despite only contributing for eight months of the year.

The firm's major revenues still come from Spain, although it also has a strong presence in Latin America and is on the verge of finalising a deal to buy American company, Energy East.