French government offers 12 euros per share for a full control of French power group EDF (EDF.PA), in a 9.7 billion euro ($9.85 billion) buyout that allows it to take charge of Europe’s nuclear energy crisis.
The finance ministry said on Tuesday that the price of last week’s sale represented a 53% premium over the shares’ closing price on July 5th, the day before the government announced its intention to fully nationalize Europe’s biggest nuclear power operator.
As of 0714 GMT, shares of the company jumped 15% to 11.70 euros after trading resumed on Tuesday following a one-week suspension.
Currently, the state already owns 84% of EDF, who has been having some troubles with their nuclear fleet. They have been delaying and cost overruns in building new reactors and, to protect French consumers, the government has capped their power prices.
Europe scrambles to find other sources of gas because it’s heavily reliant on Russian exports, France will become more stable by renationalizing EDF.
European energy suppliers have been squeezed by skyrocketing prices, and earlier this month Germany stepped in to save Uniper, its biggest gas importer from Russia.
The finance ministry announced on Tuesday that the buyout offer would be lodged with the stock exchange regulator by early September. Sources at the finance ministry say the French government wants to delist the group by the end of October.
According to the source, the planned nationalization would not have to be approved by the European Commission.
After taking into account outstanding bonds and a premium for minority shareholders, the government was planning to offer close to 10 billion euros to acquire the 16% of EDF that it did not already own, said sources.
“It’s an investment that will allow us to invest massively in nuclear,” Budget Minister Gabriel Attal told France Info radio today.
Normally, France would be exporting electricity this time of year, but it imports it from Britain, Germany, Spain, and Switzerland, and this supply crunch will likely worsen this winter.
“Nationalisation is ultimately the only way to save the company and ensure electricity production,” according to Ingo Speich of Deka Investment, which owns a small stake in EDF.
“This is a bitter but necessary step.”
Back in 2005, when EDF was listed on the Paris stock exchange, it was 33 euros per share. Investors who bought the stock back then would have made a loss.
Nonetheless, analysts stated that for EDF to be delisted, the government needs only to own 90% of it.
“We think the offer looks attractive and has high probability of success,” said in a note by Citi analyst, Piotr Dzieciolowski.
As of now the exchange rate is $1 = 0.98 euros.
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