France to Pay $10 Billion to Take Full Control of EDF

By Reuters
Reuters
Reuters
July 20, 2022 Updated: July 20, 2022

PARIS—France’s government is offering to pay 9.7 billion euros ($9.85 billion) to take full control of EDF, in a buyout deal that gives it a free hand to run Europe’s biggest nuclear power operator as it grapples with a continent-wide energy crisis.

The finance ministry said in a statement on Tuesday that the government would offer EDF’s minority shareholders 12 euros per share, a 53 percent premium to the closing price on July 5, the day before the government announced its intention to fully nationalize the debt-laden group.

EDF shares, which resumed trading on Tuesday after a one-week suspension pending details of the government buyout plan, had jumped 15 percent to 11.80 euros by 8:36 a.m. GMT.

The state already owns 84 percent of EDF, which has been dogged by unplanned outages at its nuclear fleet, delays and cost overruns in building new reactors, and power tariff caps imposed by the government to shield households from soaring electricity prices.

The war in Ukraine has deepened the crisis at the group, forcing it to buy electricity on the market at historically high prices and sell it at cheaper levels to its competitors.

France has said EDF’s nationalization will increase the security of its energy reserves as Europe scrambles to find alternatives to Russian gas supplies.

Rising prices have squeezed energy suppliers across Europe, and earlier this month Germany moved to bail out Uniper, its biggest importer of Russian gas.

France, which would normally be exporting electricity at this time of the year, is currently importing from Spain, Switzerland, Germany, and Britain, and the supply crunch is likely to worsen this winter.

“Nationalization is ultimately the only way to save the company and ensure electricity production,” said Ingo Speich, head of sustainability and corporate governance at Deka Investment, which has a small stake in EDF. “This is a bitter but necessary step.”

Analysts noted the government would only need to get 90 percent ownership of EDF to be able to delist it from the stock market.

“We think the offer looks attractive and has high probability of success,” Citi analyst Piotr Dzieciolowski said in a note.

The buyout offer will be filed with the stock exchange regulator by early September.

By Mathieu Rosemain and Leigh Thomas

Reuters