France pays $ 10 billion to take full control of EDF

PARIS, July 19 (Reuters) – The French government offers to pay 9.7 billion euros ($ 9.85 billion) to take full control of EDF (EDF.PA), in a buyout deal that gives it free rein to operate Europe’s largest nuclear power operator as it struggles with an energy crisis that covers the entire continent.

The Ministry of Finance said in a statement on Tuesday that the government will offer EDF̵[ads1]7;s minority shareholders 12 euros per share, a premium of 53% at the closing price on July 5, the day before the government announced its intention to fully nationalize the debt group. .

EDF shares, which resumed trading on Tuesday after a week-long suspension pending details of the government’s acquisition plan, had jumped 15% to 11.80 euros by 0836 GMT.

The state already owns 84% ​​of EDF, which has been persecuted by unplanned shutdowns in the nuclear fleet, delays and cost overruns in the construction of new reactors, and power ceilings imposed by the government to shield households from high electricity prices.

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

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

Rising prices have put pressure on energy suppliers across Europe, and earlier this month Germany moved to rescue Uniper, Russia’s largest importer. read more

France, which normally exports electricity at this time of year, is currently importing from Spain, Switzerland, Germany and the United Kingdom, and the supply crisis is likely to worsen this winter. read more

“Nationalization is ultimately the only way to save the company and secure electricity production,” says 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.”

With the rating agency S&P estimating that EDF’s debt could reach close to 100 billion euros this year, a bondholder in the group said that the proposed acquisition was a welcome signal of support from the government.

However, much more had to be done to stabilize the balance sheet, the bondholder added.

A banker with knowledge of the case said that the state, which gave most of a capital increase of 3 billion euros to EDF during the spring, will probably have to add more money soon.

EDF was listed on the Paris Stock Exchange in 2005 at 33 euros per share, so investors who bought the share then would have a large loss.

Analysts nevertheless noted that the government only needs to acquire 90% ownership of EDF in order to remove it from listing.

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

The takeover bid will be sent to the Norwegian Stock Exchange Authority by the beginning of September. The French government aims to complete the process of removing the group by the end of October, said a source from the Ministry of Finance.

Sources told Reuters last week that the government would pay close to 10 billion euros to buy the 16% of EDF it did not already own, once taking into account outstanding bonds and a premium for minority shareholders.

($ 1 = 0.9846 euros)

Further reporting by Dominique Vidalon, Elizabeth Pineau and Julien Ponthus in Paris, Carolyn Cohn in London; Author by Silvia Aloisi; Edited by Jan Harvey

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