FRENCH group EDF today agreed a £12.5bn takeover of British Energy in a move set to kick-start the UK's nuclear power strategy.

The state-owned utility giant will pay 774p a share, 9p higher than the price offered in July, which was rejected as too low by major British Energy shareholders - the government has a 36 per cent stake.

British Gas parent Centrica is in talks to buy a 25 per cent stake in the new British Energy following the deal, it was confirmed today. It is also looking to secure a deal to take at least 25 per cent of the energy output from BE's existing fleet of stations.

Prime Minister Gordon Brown welcomed news of the takeover as `good value for the taxpayer and a significant step towards the construction of a new generation of nuclear stations'.

Today's deal will see EDF take control of all of British Energy's nuclear power stations and play a leading role in the development of new stations in the UK, likely to be built on BE's existing sites.

It will also allow the government to bank a multi-billion pound windfall from its stake in the firm.

EDF said today it planned to build four new nuclear reactors in the UK and would maximise the potential of British Energy's eight nuclear power stations - which include Heysham 1 and 2 in Lancashire. But the government has stressed that it wants other players in Britain's nuclear power industry.

British Energy employs around 6,000 staff and produces around a sixth of the UK's electricity.

EDF's four new reactors could generate electricity to meet more than 13 per cent of the UK's forecast energy demand by the early 2020s, saving more than 14m tonnes of CO2 emissions a year, said the Department for Business and Enterprise and Regulatory Reform.

It is thought that the July offer from EDF was scuppered by opposition from institutional investors such as Invesco. Oil's slide from July's 147 US dollar peak is thought likely to have persuaded some investors to be more flexible over price demands.