The French government is willing to pay almost 10 billion euros (£ 8.5 billion) to fully nationalize EDF as ministers try to tackle the European energy crisis.
The French finance ministry said on Tuesday it had offered 9.7 billion euros or 12 euros per share to buy 16% of the EDF-laden debt it does not yet have.
The government of French Prime Minister Elisabeth Borne is trying to bolster domestic energy supply amid concerns over the finances of the energy company, which is also building the Hinkley Point C nuclear power plant in Somerset.
Ministers want to take steps to prevent energy bills from rising further in the midst of a gas supply crisis in Europe, caused in large part by aggravated relations with major supplier Russia over its invasion of Ukraine.
The offer of 12 euros per share represents a premium of 53% on the closing value of 7.84 euros for EDF shares on 5 July, the day before Borne announced the nationalization. It is also more than the price of 8 billion euros that arose last week.
EDF shares, which had been suspended since July 13 while investors waited for the details of the government plan, rose 15% to 11.80 euros, valuing the company as a whole at 45.4 billion euros .
“The price is at a high level considering peers and market conditions,” said Gregory Lafitte, an analyst at Tradition. Lafitte added that most bid price estimates had ranged from 10.50 to 12.50 euros.
The investment of almost 10 billion euros represents a significant part of the French government’s spending. The country’s state budget last year exceeded 400 billion euros, including 60 billion euros in defense spending and 61 billion euros in state pensions.
Holders of the company’s convertible debt will be offered 15.64 euros for each bond, and the final offer of EDF shares will be presented to the Autorité des Marchés Financiers in early September.
Nationalization offers some security over EDF’s finances at a crucial time for the company. President and CEO Jean-Bernard Lévy, 67, is expected to step down as soon as September.
EDF’s nuclear production accounted for 69% of France’s electricity supply in 2021. However, this level of supply is expected to fall to its lowest level in more than three decades this year due to a combination of maintenance, provisioning and repair of 12 reactors.
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Separately, France on Monday agreed to a long-term energy deal with the UAE for the supply of fuel and gas as it moves forward to reduce its dependence on Russian gas, which accounted for about 17% of its gas supplies. before the war.
In the UK, the government is due to announce on Wednesday a delayed planning decision on the future of the Sizewell C nuclear power plant proposal, with the support of EDF.
Hinkley Point C is not expected to become operational until 2027 due to construction delays.