The French government on Tuesday announced its intention to take full control of EDF, the heavily indebted electricity company which is to spearhead efforts to revive the country’s nuclear industry.
The offer to minority shareholders will be priced at 12 euros per share, meaning the full nationalization of the group will cost 9.7 billion euros ($9.9 billion), the finance ministry said. .
The electricity supplier is currently 84% owned by the state, with institutional and retail investors holding 15% and staff 1%.
EDF’s finances have been weighed down by declining output from France’s aging nuclear power plants, which it manages, and by the state-imposed policy of selling energy at a lower price to consumers in order to help them pay their energy bills.
The energy crisis triggered by the Russian war in Ukraine has added to EDF’s acute difficulties and to the urgency of ensuring France’s energy security.
President Emmanuel Macron’s government plans to launch the buyout in September, giving it time to set aside funds for the cost in a mini-budget in the fall.
The Ministry of Finance has given the end of October as the probable date of completion.
The additional budget will, however, be subject to approval by parliament, where Macron’s party and its allies lost their majority in legislative elections last month.
The full state takeover of EDF, announced on July 6, “gives EDF the means to implement the new program of nuclear power plants requested by the President and the deployment of renewable energies in France”, said the Minister of Finance, Bruno Le Maire.
The takeover bid is the easiest way to regain full control of EDF, analysts say, without the need for full legal nationalization – which there hasn’t been in France since 1981.
‘Peace of mind’
Earlier this year, Macron called for a “revival” of the country’s nuclear industry, saying he wanted up to 14 new reactors to power the country’s transition away from fossil fuels.
He also announced that he would seek to extend the life of all existing French nuclear power plants where he was sure to do so.
Currently, more than half of the 56 French nuclear reactors are shut down, either for maintenance or for corrosion problems related to aging.
Analysts say the government does not expect private investors to help raise the huge sums needed to refurbish and revive the nuclear industry, making full nationalization the best bet.
“This will allow us to approach the necessary changes in the very long term with greater serenity,” said a finance ministry official.
EDF’s debt should reach 60 billion euros by the end of the year.
Nuclear energy currently covers about 70% of France’s electricity needs. Nuclear power has just been labeled “sustainable” finance by the European Union with the support of France.
EDF shares, which had been suspended from the Paris Stock Exchange pending the announcement, rose more than 15% on Tuesday, trading at 11.75 euros.
It’s only just below the bid price, reflecting investor confidence that the takeover will go smoothly.
The offer price represents a 34% premium to the average EDF share price over the past 12 months, the finance ministry said.
The government does not need all private shareholders to submit their shares. He has the possibility of forcing the repurchase of the remaining shares as long as his participation exceeds 90%.
Once the operation is completed, EDF will be delisted from the stock exchange, 17 years after its first high-profile IPO, he said.