Shares in British Energy climbed more than 6 per cent on Friday in expectation of a £9 billion bid for the nuclear generator from EDF, the French electricity giant which is Europe's biggest energy company.

EDF's chief executive Pierre Gadonneix is understood to have been given formal board approval to make a 100 per cent offer for the British company, which admitted last month that it was in takeover talks with a number of suitors.

The French company yesterday repeated its ambitions to develop nuclear power in the UK. “The UK is one of the four countries EDF is targeting as it takes part in nuclear power development. In this context EDF is in contact with the UK’s players in the area to deliver on this objective,” a spokeswoman for the company, said.

EDF is now expected to submit a non-binding offer for British Energy, which continues to talk with several companies about a possible sale or partnership.

The French energy giant faces competition from Germany's RWE and E.ON and Spain's Iberdrola who could launch a takeover for the nuclear group. Centrica, the owner of British Gas, is understood not to be interested in bidding for the whole company. Its discussions with the nuclear group are restricted to a possible joint venture to build a new nuclear power station in which it has indicated that it would be interested in taking an equity stake in a new development.

BE shares rose more than 7% to 708.5p in early trading making the nuclear group the biggest gainer in the FTSE. The stock was the second most traded on the London exchange on Friday morning, after Vodafone.

Analysts at Evolution said that the probabiliy of a full bid for the company was increasing and suggested that the nuclear group could be sold at 900p a share, valuing the company at just over £9 billion.

The scene is now set for a bid battle for the nuclear operator, which is 35 per cent owned by the Government. British Energy said last month that talks about joint ventures to build new nuclear power stations had escalated into consideration of a full-blown takeover of the group.

British Energy is critical to any renaissance of nuclear power in the UK because it owns the sites where new nuclear power stations are likely to be built. Its employees also have most of the UK's nuclear know-how and skills which have been depleted over many years.

Hopes of a bid for BE come against a background of sharply rising UK wholesale gas prices, which underline the need for nuclear power as a source of reliable, reasonably priced, energy. Analysts at UBS, the investment bank which is advising the Government on a range of issues relating to new nuclear stations, has published research predicting that European gas prices will rise to high levels in the next decade.

A full takeover of BE by EDF would be controversial because of its large presence in the UK — it already owns London Electricity, Seeboard and Sweb and several power stations here — and because of the difficulty of a British company executing a similar takeover in France.

There could also be popular opposition to the prospect of a key strategic industry being put into the hands of a sole foreign owner.

The Secretary of State for Business has said that no limit should be put on the amount of power that is generated by nuclear energy when new generators are built. He has likened the nuclear renaissance to the North Sea oil boom and said that a new generation of nuclear power stations could provide 100,000 UK jobs and economic benefits of up to £20 billion.

Alan Duncan, the shadow spokesman for Business, Enterprise and Regulatory Reform, said yesterday that certain competition issues would arise from a takeover by EDF or other bidders and that the Government should remain clear-sighted about the consequences.

"We don’t want any single company to be in a dominant position in any market for new nuclear," he said.

However, he added that co-operation with the French to redevelop nuclear power would be necessary. "Far from threatening our skills base, this could actively add to it," Mr Duncan said.

If EDF made a successful bid for British Energy, the company would probably have to sell some of British Energy's assets to avoid the UK's civil nuclear capacity being concentrated in the hands of a single company.

British Energy currently has a market value of £7 billion.

Separately, EDF said that had appealed a Spanish court's attempt to force it to declare its intentions in respect of Iberdrola. The Spanish court ruled at the end of March that EDF should declare if it has begun, or is preparing, a bid for Iberdrola through the acquisition of shares, swaps or securities convertible into stock.

The ruling followed months of speculation that the French utility has been in talks with Spanish constructor Actividades de Construccion y Servicios over a possible joint bid for Iberdrola, with a view to a breakup of the group.

Times Recommends

• ‘Lame duck’ fear for FSA as chief quits
• Storm over bailout of EU's most ailing economy
• Northern Rock to drop 100% savings guarantee