A big shareholder in British Energy has called for the nuclear power firm to merge with gas supplier Centrica.

Neil Woodford, head of investment at Invesco, which owns a 15 per cent stake in British Energy as well as five per cent of Centrica, has said the merger is the "obvious solution" to the future of both companies.

Earlier this month, a £12 billion takeover of BE by France's EDF collapsed at the last minute after its major institutional shareholders, including Invesco, reportedly called for a higher price tag to reflect rising energy prices.

Mr Woodford believes a tie-up between BE and British Gas owner Centrica could still involve EDF, which is mostly owned by the French government.

He said: "A combination of British Energy and Centrica solves the problems facing both companies today. Together, they can work out a joint venture with EDF to build nuclear sites."

Mr Woodford is this week due to lay out his plans to the Shareholder Executive, the body which manages the Government's 35.5 per cent stake in BE.

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