The two biggest shareholders in British Energy rejected EDF’s £12 billion takeover proposal on only one ground: price.

Invesco Investment Management and M&G, which is owned by Prudential, the insurer, between them own just over 22 per cent of the nuclear group. That holding, worth almost £1.7 billion, gives the two fund managers almost enough power to block the prospective French buyer between them.

Invesco is a $483 billion (£247 billion) asset manager based in Atlanta, Georgia. M&G, which is based in London, manages about £160 billion of funds in total. It is understood that the fund managers rejected the terms in a series of late-night telephone calls with British Energy’s management. Although neither was prepared to explain their actions, sources in the fund management industry said that the two firms were not alone in thinking that EDF’s proposal, pitched at 775p a share, was not enough.

One leading British Energy shareholder said: “The proposals do not reflect the long-term value of our investment. I am surprised that they felt close to agreeing a deal; we had been making it clear for weeks that we did not like the price that was being talked about. This business is a very good long-term prospect. We think there is a valuable future in carbon-free power generation. EDF’s proposition is a long way off.”

British Energy’s owners also felt that a “contingent value rights” component introduced as the talks entered the final stages was not helpful. This would have given shareholders a higher reward if the business met certain performance targets.

One fund manager said: “ It is like a stub equity stake in British Energy and we did not want it.” Another top ten shareholder threw his weight behind the existing management. He said that British Energy was being run well and it was viable for the company to develop individual nuclear sites in partnership with other investors. He emphasised that his investment in British Energy was a “commercial enterprise” and if EDF returned with a sufficiently high offer it would be well received. That prospect was unlikely, he said.

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