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

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

They said no. The price — 765p a share, or a smaller cash price with some rights to future profits attached — was not enough.

The two fund managers, who together control 20% of BE, had blocked a deal that had been six months in the planning. Advisors to the companies and the London government were in talks to see if the agreement could be revived. EDF’s takeover of BE was seen by ministers as a way to give their plan for new nuclear power a head start.

EDF is a leading operator of nuclear stations and would arrive with a design for new power plants tucked under its arm. BE would provide the sites for the new stations.

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

The vagaries of the market meant the plan came unstuck. While BE was negotiating with various suitors, including EDF, RWE and other European utilities, the price of electricity crept upwards, taking with it BE’s share price. By the time it came to serious negotiations, some analysts were putting future values on BE shares of up to £12, 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.

Ministers were clearly stunned by the reversal. “I am disappointed that talks 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.

“That wasn’t the view of all of the shareholders and the government is a minority shareholder in a publicly listed company. It is now a matter for both boards to see how to proceed.” Hutton has been the biggest champion of nuclear power in the government, turning Brown’s commitment to its renaissance into reality.

He has backed plans for an overhaul of the industry’s regulatory framework — in particular the Nuclear Installations Inspectorate (NII) — and a new “pension plan” system that will ensure new power plants put aside money to pay for their decommissioning in the future.

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