Centrica plc today said that it would raise its shareholding in Belgian generation and supply company SPE SA to a controlling 51 per cent, after having exercised its pre-emption right over the 25.5 per cent interest in SPE currently held by GDF International SAS (GdF) after it acquired GdF's 50 per cent stake in their equal joint joint venture, Segebel SA.

This will be added to Centrica's existing 25.5 per cent interest. GdF was required to dispose-off its stake in SPE as part of the anti-trust remedies imposed by the European Commission as a condition to its approval of GdF's merger with Suez.

Centrica is making the acquisition through its subsidiary, Centrica Overseas Holdings Limited.

On completion, which is expected to take place in September 2008, Centrica will pay €515 million in cash for GdF's 25.5 per cent stake in SPE. In addition, deferred consideration of up to €105 million will be payable based on the final terms and the timing of approval of the "Pax Electrica 2" agreements under which SPE will acquire additional power offtake from Belgian nuclear power plants.

After taking into account estimated fair value adjustments resulting from SPE becoming a subsidiary of Centrica, the acquisition of the additional 25.5 per cent interest in SPE is expected to be broadly earnings neutral for Centrica in 2009.

In June 2005 Centrica had announced a 50:50 joint venture with GdF to acquire a controlling 51 per cent stake in Belgian energy company SPE, in a deal which valued the whole business at €969 million at the time, with Centrica and GdF each taking an effective interest of 25.5 per cent. The remaining 49 per cent of SPE will continue to be owned by a number of Belgian banks and municipalities.

SPE's proforma earnings before interest, tax, depreciation and amortisation is approximately €240 million per annum when adjusted for a full year effect of both tranches of Pax Electrica 2, an agreement between the Belgian government and Suez's subsidiary, Electrabel, under which a proportion of the output from Belgium's 6GW of nuclear capacity, controlled by Electrabel, will be made available to competing third party companies.

Under the terms of the agreement, SPE will receive additional power offtake of up to 535MW (comprising of two tranches of power, the first of 250MW and the second of 285MW).

SPE is the second largest power generation company in Belgium with around 1.6 GW of principally gas-fired production capacity and around 400 MW of capacity secured under long term procurement contracts. SPE has a customer base of around 1.5 million energy accounts and a retail market share of nearly 20%. For the year ended 31 December 2007, SPE's profit before tax was €39 million. As at 31 December 2007, SPE had gross assets of €1.8 billion.

Sam Laidlaw, Centrica's chief executive said, "Today's transaction is a logical next step in building on our existing stake in SPE; it delivers us a valuable controlling stake in the second largest power generation and energy retailing company in Belgium, which has one of the most dynamic energy markets in Europe.

Our 51 per cent stake in SPE increases the opportunities for Centrica in Europe and the Pax Electrica 2 agreements further enhance the value of this stake by making SPE increasingly competitive in the Belgian marketplace."