The French government is prepared to pay nearly €10bn (£8.5bn) to fully nationalize EDF as ministers try to tackle Europe’s energy crisis.
France’s finance ministry said on Tuesday it had offered 9.7 billion euros, or 12 euros per share, to buy the 16 percent of indebted EDF it does not already own.
French Prime Minister Elisabeth Bourne’s government is trying to boost domestic energy supplies amid concerns about the finances of the energy company, which is also building the Hinkley Point C nuclear power station in Somerset.
Ministers want to act to prevent energy bills from jumping even higher amid Europe’s gas supply crisis, caused in large part by strained relations with major supplier Russia over its invasion of Ukraine.
The €12 per share offer is a 53% premium to the closing price of €7.84 for EDF shares on July 5, the day before Borne announced the nationalisation. That’s also more than the €8bn price tag that emerged last week.
Shares in EDF, which has been suspended since July 13 as investors await details of the government’s plan, jumped 15 percent to 11.80 euros, valuing the entire company at 45.4 billion euros.
“The price is at a high level considering the competitors and market conditions,” said Gregory Lafitte, an analyst at Tradition. Lafitte added that most estimates for the offer price ranged from €10.50 to €12.50.
The investment of nearly 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 for each bond, and the final offer for EDF shares will be submitted to the Autorité des Marchés Financiers by early September.
The nationalization offers some security for EDF’s finances at a crucial time for the company. Longtime chairman and chief executive Jean-Bernard Levy, 67, is expected to step down as soon as September.
EDF’s nuclear generation 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, recharging and repairs at 12 reactors .
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Separately, France negotiated a long-term energy deal with the United Arab Emirates on Monday for fuel and gas supplies as it seeks to reduce its dependence on Russian gas, which accounted for about 17 percent of its gas supplies before the war.
In the UK, the government is due to announce a planning decision on the future of the proposed EDF-backed Sizewell C nuclear power station on Wednesday.
Hinkley Point C is not expected to be operational until 2027 due to construction delays.
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