The French government on Tuesday outlined its plans to take full control of EDF, the heavily indebted energy company set to lead efforts to revitalize the country’s nuclear industry.
The offer to minority shareholders will have a price of 12 euros per share, meaning the operation to fully nationalize the group will cost 9.7 billion euros ($9.9 billion), the Treasury Department said.
The electricity supplier is currently 84 percent owned by the state, institutional and private investors hold 15 percent and employees hold 1 percent.
EDF’s finances have been strained by the declining performance of the aging French nuclear power plants it manages and the government-imposed policy of selling energy below cost to consumers to help them pay their electricity bills.
The energy crisis triggered by Russia’s war in Ukraine has compounded EDF’s acute difficulties and the urgency of ensuring France’s energy security.
President Emmanuel Macron’s administration plans to launch the takeover in September, giving it time to fund the costs in a mini-budget in the fall.
The Ministry of Finance named the end of October as the expected completion date.
However, the supplementary budget must be approved by Parliament, where Macron’s party and its allies lost their majority in last month’s general election.
The full state takeover of EDF, first announced on July 6, “will give EDF the means to implement the new nuclear power plant program requested by the President and the roll-out of renewable energy in France,” Finance Minister Bruno Le Maire said.
The public takeover bid is the easiest way to regain full control of EDF, analysts said, without requiring full legal nationalization — which France hasn’t seen since 1981.
– ‘Peace of Mind’ –
Earlier this year, Macron called for a “renaissance” of the country’s nuclear industry, saying he wanted up to 14 new reactors to help spur the country’s transition away from fossil fuels.
He also announced that he would try to extend the life of all existing French nuclear power plants where it was safe to do so.
Currently, more than half of France’s 56 nuclear reactors are shut down, either for maintenance or due to age-related corrosion problems.
Analysts say the government doesn’t expect private investors to help raise the huge sums needed to refurbish and restart the nuclear industry, making full nationalization the best bet.
“It will allow us to approach the changes that are needed in the very long term with more composure,” said a Treasury Department official.
EDF’s debt is expected to reach 60 billion euros by the end of the year.
Nuclear energy currently covers around 70 percent of France’s electricity needs. Nuclear energy was recently awarded a “sustainable” finance label by the European Union, with the support of France.
EDF shares, which were suspended on the Paris Stock Exchange pending the announcement, rose more than 15 percent on Tuesday to trade at €11.75.
That’s just under the asking price, reflecting investor confidence that the acquisition will go smoothly.
The offer price represents a premium of 34 percent over EDF’s average 12-month share price, the Treasury Department said.
The government does not need all private shareholders to submit their shares. It has the ability to force a buyback of remaining stock as long as its stake rises above 90 percent.
Once the operation is complete, EDF will be delisted 17 years after its high-profile initial listing, it said.
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