British Energy, the nuclear power generator, is in talks about a takeover or merger of the £5.9 billion company.

The Times reported a month ago that British Energy, the UK’s biggest electricity generator, was considering a break-up plan that would involve creating a new company focused on building the next generation of nuclear power plants.

Today, the group, 35 per cent owned by the British Government, said its disclosure came after consultations with the City's Takeover Panel.

A source close to British Energy told Times Online: "Talks are still very much at an early stage and a range of possibilities are being considered including a combination of businesses, co-investment, joint ventures and equity stakes as well as a takeover offer for the whole company."

The group said in a statement: “The board announces that the company is in discussions with interested parties in the context of its future and its plans to take a pivotal role in any new nuclear programme.”

Shares in the energy group were up 16 per cent shortly after the London market opened this morning.

Talks are believed to be at an early stage. The statement follows weekend reports that the Government is considering selling its £2 billion stake in the group.

Germany’s E.ON AG and RWE, France’s EDF, Spain's Iberdrola and Britain’s Centrica had been approached to see if they were interested in acquiring part of the stake.

As Britain’s largest nuclear power provider, British Energy will play a major role in any development of Britain’s nuclear power supply. Earlier this month the Government announced it is making up to 18 more sites available for the next generation of nuclear power stations as well as signalling an acceleration of its plans for a new reactor.

A spokesman for the Department for Business, Enterprise and Regulatory Reform said in a statement on at the weekend: “The Government is keeping its stake in British Energy under review.”

The spokesman said UBS had been appointed to advise the Government on commercial and financial aspects of the interest in nuclear new build in Britain.

He added: “This may include advice on any proposals coming forward from British Energy following the company’s call for new-build partners, but UBS is not touting the Government’s stake on the market as is suggested.”

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