The French government is poised to pay nearly €10bn (£8.5bn) to fully nationalise EDF as ministers attempt to tackle the European energy crisis.
The French finance ministry said on Tuesday it had offered €9.7bn or €12 a share to buy the 16% of debt-laden EDF it does not already own.
French prime minister Elisabeth Borne’s government is trying to shore up domestic energy supplies amid concerns over the finances of the energy company, which is also building the Hinkley Point C nuclear power station in Somerset.
Ministers want to take action to keep energy bills from soaring even higher amid a gas supply crunch in Europe, largely caused by soured relations with big supplier Russia over its invasion of Ukraine.
The €12-a-share offer is a premium of 53% to the closing value of €7.84 for EDF shares on 5 July, the day before Borne announced the nationalisation. It is also more than the €8bn price tag which emerged last week.
Shares in EDF, which had been suspended since 13 July while investors awaited the details of the government plan, jumped 15% to €11.80, valuing the whole company at €45.4bn.
“The price is on the high range level taking into account peers and market conditions,” said Gregory Lafitte, an analyst at Tradition. Lafitte added that most estimates for the offer price had ranged from €10.50 to €12.50.
The near €10bn investment represents a sizeable chunk of French government spending. The country’s state budget last year surpassed €400bn, including €60bn on defence spending and €61bn on state pensions.
Holders of the company’s convertible debt will be offered €15.64 for each bond, and the final offer for EDF stock will be submitted to Autorité des Marchés Financiers by early September.
The nationalisation offers some certainty over EDF’s finances at a crucial juncture for the company. The longstanding chairman and chief executive officer, Jean-Bernard Lévy, who is 67, is expected to step down as soon as September.
EDF’s nuclear production accounted for 69% of France’s electricity supplies in 2021.
However, this supply level is expected to fall to the lowest level in more than three decades this year because of a combination of maintenance, refuelling and repairs at 12 reactors.
Separately, France agreed a long-term energy deal with the United Arab Emirates on Monday for fuel and gas supplies as it moves to reduce its dependency on Russian gas, which accounted for about 17% of its gas supplies before the war.
In the UK, a delayed planning decision on the future of the proposed Sizewell C nuclear power plant, backed by EDF, is due to be announced by the government on Wednesday.
Hinkley Point C is not expected to be in operation until 2027 because of construction delays.
July 19, 2022 at 03:28PM Alex Lawson Energy correspondent