SHORTLY before 5pm last Thursday, the government’s plans for a quick start on a new fleet of nuclear power stations hit a road block.

Directors at British Energy (BE), the UK’s nuclear power company, had telephoned their biggest shareholders, the City fund managers Invesco and M&G, to ask whether they would accept a takeover proposal from the giant French utility group EDF.

They said no. The price, at 765p a share or 700p with some rights to future profits attached, was not enough. The two fund managers, who together control more than 20% of BE, had blocked a deal that had been six months in the planning.

The government and advisers to the companies are expected to resume talks this week to consider whether a deal can still be salvaged.

EDF’s takeover of BE was seen by ministers as a way to give their plan for nuclear power a head start. EDF is a leading operator of nuclear stations and would arrive with a French design for new power plants tucked under its arm. BE would provide the sites for these stations.

It seemed a marriage made in heaven, and the government, with a 35% interest in BE acquired when it bailed out the company six years ago, was in an ideal situation to play the matchmaker.

The vagaries of the market meant that the plan came unstuck. While BE was negotiating with various suitors, including EDF, RWE and other European utilities, the price of electricity crept steadily upward, taking BE’s share price with it.

By the time it came to serious negotiations, some analysts were putting future values on BE shares of up to 1,200p, nearly double what EDF had contemplated by way of an offer.

Last week the twain finally failed to meet. Invesco and M&G told the BE directors they would not accept the offer, leaving them unable to recommend it to the company’s other shareholders.

“It is a really difficult situation,” said a source close to the BE board. “The government was very keen to see this happen and the directors were prepared to recommend the deal. But the shareholders have every right to their opinion on the value of the company.”

Ministers were clearly stunned by the reversal. “I am disappointed that talks between British Energy and EDF have not yet been successful,” said John Hutton, secretary of state for business.

“We thought it was a good deal and we were ready to accept. EDF is the world’s largest nuclear operator. It would have been a sensible way to take forward new nuclear plans in the UK.

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