France: The State will launch a €9.7 billion bid to regain full control of EDF – 07/19/2022 at 11:41


FRANCE: THE STATE WILL LAUNCH A €9.7 BILLION OFFER TO TAKE BACK TOTAL CONTROL OF EDF

by Leigh Thomas and Mathieu Rosemain

PARIS (Reuters) – The French government announced on Tuesday that it was launching an offer of 9.7 billion euros to raise EDF’s capital to 100%, which will give the executive free rein to lead the energy company in full energy crisis in Europe against the background of the Russian invasion of Ukraine.

As part of this renationalisation project, the Ministry of the Economy has indicated that the government, which currently owns 83.9% of EDF, will offer 12 euros per EDF share and 15.64 euros for each convertible bond (Oceane) of the group.

The offer on EDF shares represents a premium of 53% compared to the closing price on July 5, the day before the announcement by the Prime Minister, Elisabeth Borne, of the project to renationalise the main European nuclear operator.

On the Paris Stock Exchange, the action, whose listing was suspended for a week, opened up 15% to 11.75 euros, thus almost matching the offer price.

“We believe the offer is attractive and has a high probability of success,” Citi analysts commented in a research note.

As Europe strives to reduce its dependence on Russian gas, France considers that the nationalization of EDF will allow it to strengthen the security of its energy reserves.

“This operation (…) reinforces the energy independence of France”, underlines the Minister of the Economy, Bruno Le Maire, in a press release.

“It gives EDF the necessary means to accelerate the implementation of the new nuclear program wanted by the President of the Republic, and the deployment of renewable energies in France”, he continues.

The government plans to submit its offer to the Autorité des marchés financiers by early September.

According to a source in the Ministry of the Economy, the government wants to complete the process of delisting EDF by the end of October.

This same source adds that the financing of the operation will have to be approved by parliament, specifying that a green light from the European Commission was not necessary.

Following the government’s announcement, EDF announced that its board of directors has set up an ad hoc committee which will be responsible for issuing a recommendation on the offer.

Last week, sources familiar with the matter told Reuters that a 100% takeover of EDF could cost up to 10 billion euros.

“It’s an investment that will allow us to invest massively in nuclear power,” Public Accounts Minister Gabriel Attal told franceinfo on Tuesday.

France, which is usually an electricity exporter at this time of year, currently imports it from Spain, Switzerland, Germany and Great Britain.

“Nationalization is ultimately the only way to save the company and guarantee electricity production,” said Ingo Speich, head of sustainability and corporate governance issues at Deka Investment, a minority shareholder in EDF. .

EDF was listed on the stock market in 2005 at a price of 33 euros per share. The renationalisation operation will therefore result in a significant loss for investors who purchased EDF shares at that time.

(Report Leigh Thomas and Mathieu Rosemain, with Dominique Vidalon and Julien Ponthus in Paris and Carolyn Cohn in London, French version by Matthieu Protard, edited by Jean-Michel Bélot)



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