The French government is planning to pay €9.7 billion to fully nationalise EDF as it moves to bolster the nuclear specialist’s finances amid an energy crisis.
The state, which already holds 84 per cent of the company, will launch a tender offer to buy out the remaining shares and convertible bonds after the summer.
The government has presented the buyout as a way of financially shoring up EDF, as it embarks on a major plan to build six new nuclear reactors in France in the coming years, the biggest order in more than two decades.
The economy ministry said on Tuesday that an offer of €12 per EDF share will be made to minority investors, representing a 53 per cent premium to EDF’s closing price before the nationalisation was announced earlier this month. The deal will also entail an offer to buy out the 60 per cent of convertible bonds the state does not already hold.
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Shares in EDF, which were suspended last week pending further announcements about the buyout, soared nearly 15 per cent in early trading, leaving them close to the offer price.
The government said it also wanted to accelerate decision-making at EDF because it will be integral to France’s longer-term strategy to reduce carbon emissions, which includes investing in nuclear.
EDF has struggled with outages in recent months, which involved corrosion problems at reactors leading to unexpected shutdowns. That has forced France to switch to more energy imports just as Europe rushes to pivot away from Russian gas, and EDF to buy supply on expensive wholesale markets.
Its finances have also been hobbled by political measures to shield consumers from energy price rises. Analysts and people close to the company said this has left EDF in need of more capital.
The tender offer will be launched at the end of September with a view to delisting the shares by the end of October, a French economy ministry official said.
However, the deal still faces potential hurdles. The French government has earmarked €12.7 billion for the buyout and other operations, which will require parliamentary approval.
“It’s top of our list of priorities and is already being discussed with opposition parties,” said the economy ministry official.
The nationalisation of EDF comes after 17 years as a listed company, which has been fraught with political battles and a steady decline in share price since a peak in 2007.
“With the alternative to nationalisation being a huge deeply discounted rights issue and limping on through more earnings and debt downgrades, institutional investors should be pleased with the premium to market being offered and exit the stock,” said analysts at investment bank Cowen. – Copyright The Financial Times Limited 2022
