Shares in British Energy defied Monday's market collapse after admitting it could be taken over.

The company's stock price was trading up 9% to 622.5p at midday on Monday, following a revealing statement to the stock market.

British Energy said it could face a takeover or a business combination with another European utility. It is currently in discussions with a number of companies with the view to develop new nuclear power stations in the UK. 'These discussions could lead to a business combination or an offer for the Company, although there can be no certainty that any offer will be made,' said British Energy.

The statement follows speculation last week that British Energy could be taken over Germany's RWE or that the UK government may offer up its stake in the company to a European utility including Centrica, Eon or Iberdrola.

The UK government holds a 35.2% stake in British Energy and is considering its options. 'The Government is monitoring developments closely and will consider its position in relation to any proposal in the public interest, having regard to its objectives in relation to energy policy and its obligations to the taxpayer,' a business department spokesman said.