France offers $10 billion to take full control of EDF

By Mathieu Rosemain and Leigh Thomas

PARIS (Reuters) -France’s government is offering 12 euros per share to take full control of EDF, in a 9.7 billion euro ($9.85 billion) buyout offer that gives it a free hand to run the nuclear power group as it contends with a European energy crisis.

The finance ministry said in a statement on Tuesday that the price represented a 53% premium to the shares’ closing price on July 5, the day before the government announced its intention to fully nationalise Europe’s biggest nuclear power operator.

Shares in the group, which resumed trading on Tuesday after a one-week suspension pending details of the government buyout plan, jumped 15% to 11.70 euros by 0714 GMT.

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

The war in Ukraine has deepened the crisis at the debt-laden group.

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

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

The finance ministry said on Tuesday the buyout offer would be filed with the stock exchange regulator by early September. The French government aims to complete the process of delisting the group by the end of October, a finance ministry source said.

The source added that the planned nationalisation would not require approval from the European Commission.

Sources had told Reuters last week the government would offer 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.

“It’s an investment that will allow us to invest massively in nuclear,” Budget Minister Gabriel Attal told France info radio after the announcement on Tuesday.

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.

“Nationalisation 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.”

EDF was listed on the Paris stock exchange in 2005 at 33 euros per share, so investors who bought the stock then would be nursing a big loss.

Still, analysts noted the government would only need to get 90% ownership of EDF to be able to delist it.

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

($1 = 0.9846 euros)

(Additional reporting by Dominique Vidalon and Julien Ponthus in Paris and Carolyn Cohn in London; Writing by Silvia Aloisi; Editing by Jan Harvey)

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