RWE, the German utility company, has made an indicative all-cash offer of close to 700p a share for British Energy, in a deal that could value the UK’s nuclear operator at up to £11bn ($21.7bn).

A sale at that price would raise almost £4bn for the government, although the money has been earmarked for the Nuclear Liabilities Fund to pay for the clean-up of reactor sites.

RWE, which made the offer several weeks ago, has now been granted access to British Energy’s data room and is carrying out due diligence, according to people close to the situation.

The offer was made before British Energy confirmed on March 17 that it was in talks that could lead to a full takeover. News of the offer sent British Energy shares up 29½p or more than 4 per cent to 731p at the open.

British Energy has not yet triggered a “formal” auction of the company and is still considering whether to sell to one bidder or a consortium.

EDF Energy, the UK arm of Electricité de France, is also conducting due diligence. It is understood to have initially made an offer to buy only part of British Energy, because it was reluctant to buy the nuclear generator’s ageing advanced gas-cooled reactors (AGRs).

Competition from RWE will mean that EDF would have to bid for all of British Energy, including the AGRs.

Centrica, the UK energy company, had also previously submitted an all-share offer for the nuclear operator, but this is unlikely to be a favoured option.

EDF is also considering a joint bid and is in early-stage discussions about teaming up with Centrica.

RWE and the rival bidders are expected to make new offers once they have completed their due diligence on the company.

British Energy declined to comment. The company’s shares closed just over 1 per cent lower at 701½p on Wednesday.

RWE had less than €5.1bn ($8.06bn) in net debt at the end of last year, giving it ample financial firepower for a deal. Paying £11bn would leave it with net debt only about three times last year’s operating profits. Analysts at Société Générale estimated that EDF could pay up to 760p a share for British Energy, valuing the company at more than £12bn.

The government is considering the sale of part or all of its 35 per cent interest in British Energy. It has signalled it would be prepared to accept a foreign buyer, but stressed it wants to ensure there is a competitive mar­ket in developing new nuclear power stations in Britain.