EDF set to buy British Energy for £12bn

French energy giant EDF is set to seal the deal on a £12bn takeover of British Energy this week, after improving its offer for the nuclear operator.

According to industry sources, an announcement on the deal could come as early as tomorrow. It will be welcomed by the government, which hopes the sale will kick-start a nuclear renaissance in the UK.

It is thought EDF has raised its initial offer of 765p a share - rejected by shareholders in July - to 774p or an alternative of 700p and some CVRs, which would offer shareholders a slice of future profits.

The company is also expected to agree to hand two of British Energy's key nuclear sites back to the government. The sites would be auctioned off to other power companies later this year, increasing competition in the sector.

The news comes as industry secretary John Hutton prepares to scorn critics of new nuclear and coal-fired power stations in a speech at the Labour Party conference.

He will tell delegates in Manchester that a failure to build new reactors would threaten Britain's sovereignty and long-term competitiveness.

“Our ambition must be more than weathering the economic storm unsettling the world; we must make the changes now so we emerge stronger and fitter,” he is expected to say.

“That means dealing with one of the most important threats to our long-term competitiveness, indeed our sovereignty as a nation, and that is the new international battle for energy security.”

He is to add that he will not “turn his back” on coal and is expected to criticise opposition parties for “pandering to fashionable causes”.

“No coal plus no nuclear equals no lights,” he will say.