British Energy rebuffed a £10 billion-plus takeover offer from EDF last night, arguing that recent increases in wholesale energy prices justified a valuation higher than that proposed by the French energy group last month.

A statement from British Energy, whose one coal-fired and eight nuclear power stations generate a sixth of Britain’s electricity, said that it had received a number of proposals but none had been above its closing share price on Friday of 735p, which valued the company at £11.78 billion.

“The board is clear that in current circumstances such proposals do not represent value for shareholders as they fail to take proper account of the current forward price of electricity and the value of the company’s sites and people in the context of nuclear new build,” the statement said.

Surging oil and gas prices have driven long-term forward electricity prices up sharply in recent months. Analysts believe that they stand above £50 per megawatt hour. Lakis Athanasiou, an analyst for Evolution Securities, believes that this means that British Energy shares could be worth 935p.

EDF is believed to be the only utility to have submitted a firm, fully financed offer of about 680p to 700p a share, ahead of a May 16 deadline with Rothschild, the investment bank that is handling the sale.

“The current energy pricing environment and the significant ebitda [earnings before interest, tax, depreciation and amortisation] upgrade coming through now will mean that existing large shareholders [the six largest shareholders have 43 per cent of the free float] will be reluctant to sell their British Energy stakes in the low 700s,” Mr Athanasiou wrote in a note to clients.

Analysts at Credit Suisse said: “It is hard to conclude . . . that British Energy’s management would be justified in agreeing an offer at the current share price, given market sentiment seems to be shifting to assume high commodity prices are here to stay.”

Meanwhile, talks are continuing with Iberdrola, the Spanish owner of ScottishPower, and RWE, of Germany, which are considering a joint offer for the company, although no firm price has yet been tabled.

Centrica, the owner of British Gas, also remains interested in acquiring all or part of British Energy.

EDF declined to comment, but the group is understood to be considering a higher offer.

The statement from British Energy, which is 35 per cent-owned by the Government, continued: “The board will continue to progress the opportunities available, either through an offer for the company or other partnering arrangements, which maximise the value of British Energy’s participation in nuclear new build. It expects further discussions with interested parties.” It added that it was possible that no offer for the company may be made.

The Government wants to use the sale of its stake in British Energy to kick-start construction of a new generation of nuclear power plants.

The company is expected to be a key player in the process through its ownership of most of the preferred sites. British Energy shares fell 2 per cent after the announcement to close at 721p.

For sale

— The Nuclear Decommissioning Authority (NDA) is believed to be preparing to auction three of its biggest plots of lands for potential new nuclear power stations

— The NDA, which has made land surrounding 18 existing or former nuclear power stations available for potential bidders, said in April that it had received interest from more than 30 parties, including some of Europe’s biggest utilities

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