Valuing British Energy has proven difficult due to the impact of a surge in power prices, which has led British Energy and its shareholders to hold out for a higher price. However, a recent fall in prices may have encouraged the company to secure an agreement.

EDF is also looking to agree a deal with British Gas-owner Centrica for the UK firm to take a minority stake in British Energy, although the terms have yet to be decided -- causing a delay in the formal announcement, the source said.

A separate industry source said talks between EDF and Centrica were continuing. The involvement of Centrica is seen as crucial to winning over the support of the British Government, which is reluctant to see the nuclear giant falling entirely into overseas hands.

Once a deal is agreed with EDF the offer will be put to shareholders including the government, who would then be asked to recommend the price.

However, the deal would immediately raise competition issues due to EDF’s presence in the UK wholesale and retail gas supply markets.

British Energy has attracted takeover interest since Britain gave the green light to new nuclear power stations in January. The company owns eight power stations, all of which have surrounding land suitable for new building.

It first said it was in talks in March, but an initial string of interested suitors was reduced to one by June. Industry sources said Centrica had offered an all-share deal, which was rejected due to an absence of cash.

A takeover of British Energy would net over 4 billion pounds for government coffers, although the cash has been earmarked to help clean up after Britain’s closing nuclear power stations.

(Reporting by John Bowker; Editing by Dominic Evans)