France will pay $10 billion for full control of the EDF

PARIS, July 19 (Reuters) – The French government is offering to pay 9.7 billion euros ($9.85 billion) for full control of the EDF. (EDF.PA)in a purchase that gives it free rein to run Europe’s largest nuclear energy operator while grappling with a continent-wide energy crisis.

The Finance Ministry said in a statement on Tuesday that the government will offer minority EDF shareholders €12 per share, a 53% premium over the closing price on July 5, a day before the government announced its intention to fully nationalize the debt-laden group. .

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

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The country already owns 84% ​​of the EDF, which has suffered unplanned outages in its nuclear fleet, delays and cost overruns to build new reactors, and power tariff ceilings imposed by the government to protect households from rising electricity prices.

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

France said the nationalization of EDF would increase the security of its energy reserves as Europe seeks alternatives to Russian gas supplies.

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

France, which usually exports electricity at this time of year, imports from Spain, Switzerland, Germany and Britain, and the supply crisis is likely to worsen this winter. Read more

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

With rating agency S&P estimating that EDF debt could reach nearly €100 billion this year, one of the group’s bondholders said the proposed acquisition was a welcome sign from the government.

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

A banker familiar with the matter said the state, which provided the bulk of the €3 billion capital increase to EDF in the spring, is likely to inject more money soon.

EDF was listed on the Paris Stock Exchange in 2005 at €33 a share, so investors who bought the stock at that time would suffer a huge loss.

However, analysts noted that the government would only need to acquire 90% of the ownership of EDF to be able to write it off.

“We believe the offer looks attractive and has a high potential for success,” City analyst Pyotr Dzichiulovsky said in a note.

The offer to buy will be submitted to the exchange regulator by early September. A source at the Finance Ministry said that the French government aims to complete the delisting of the group by the end of October.

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Sources told Reuters last week that the government will pay close to ten billion euros to buy the 16% of EDF it does not already own, taking into account existing bonds and a minority shareholder premium.

(1 dollar = 0.9846 euros)

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Additional reporting by Dominic Vidalon, Elizabeth Pinault and Julian Ponthos in Paris and Caroline Kohn in London. Written by Silvia Aloisi; Editing by Jean Harvey

Our criteria: Thomson Reuters Trust Principles.

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