Germany's RWE and Britain's Centrica have both made indicative bids for British Energy valuing the nuclear power operator at up to £11 billion (€13.8 billion), sources close to the matter said today.
One source said that RWE, Europe's third-biggest utility and the owner of British energy supplier nPower, made an all-cash proposal of just under 700 pence a share.
Another source said Centrica, which owns British Gas, had put forward an all-share bid, also pitched below 700 pence a share.
Utilities across Europe are stalking British Energy, which is the UK's only private nuclear power generator and is 35 per cent owned by the British government, to take advantage of the country's new drive towards nuclear power.
Shares in British Energy, the country's biggest electricity producer, leapt by up to 5.6 per cent to 741 pence on speculation of a bidding war and hopes that other potential suitors, such as Electricite de France (EDF), might enter the fray.
"RWE has set a benchmark, so that puts the pressure on other potentially interested parties," said Charles Stanley analyst Tina Cook.
RWE's proposal was submitted before March 17th, when British Energy said it was in talks that could lead to a takeover or partnerships, the source said.
RWE, Centrica, British Energy and EDF all declined to comment today.
Eager to reduce its exposure to energy imports, cut carbon dioxide emissions and diversify its sources of power away from fossil fuels, Britain has committed to building a new generation of nuclear power plants.
Analysts believe the sites of British Energy's existing, but ageing, power stations will play a key role in the expansion.
British Energy shares have risen around a third in value this year on speculation of a bid battle, despite continued problems at the company's existing power plants. At 10.50am, the stock was up 4.3 per cent at 731.5 pence.