France To Pay $10bn To Take Full Control Of EDF

France’s government is offering to pay 9.7 billion euros ($9.85 billion) to take full control of EDF (EDF.PA), in a buyout deal that gives it a free hand to run Europe’s biggest nuclear power operator as it grapples with a continent-wide energy crisis.

The finance ministry said in a statement on Tuesday that the government would offer EDF’s minority shareholders 12 euros per share, a fifty three per-cent (53%) premium to the closing price on July 5, the day before the government announced its intention to fully nationalise the debt-laden group.

EDF shares, which resumed trading on Tuesday after a oneweek suspension pending details of the government buyout plan, had jumped fifteen per-cent (15%) to 11.80 euro.

The state already owns eighty four per-cent (84%) of EDF, which has been dogged by unplanned outages at its nuclear fleet, delays and cost overruns in building new reactors, and power tariff caps imposed by the government to shield households from soaring electricity prices.

The war in Ukraine has deepened the crisis at the group, forcing it to buy electricity on the market at historically high prices and sell it at cheaper levels to its competitors.

France has said EDF’s nationalisation will increase the security of its energy reserves as Europe scrambles to find alternatives to Russian gas supplies.

Rising prices have squeezed energy suppliers across Europe, and earlier this month Germany moved to bail out Uniper, its biggest importer of Russian gas.

France, which would normally be exporting electricity at this time of the year, is currently importing from Spain, Switzerland, Germany and Britain, and the supply crunch is likely to worsen this winter.

“Nationalisation is ultimately the only way to save the company and ensure electricity production,” said Ingo Speich, head of sustainability and corporate governance at Deka Investment, which has a small stake in EDF. “This is a bitter but necessary step.”

With rating agency S&P estimating EDF’s debt could reach close to 100 billion euros this year, a bondholder in the group said the proposed buyout was a welcome signal of support from the government.

However, far more needed to be done to stabilise the balance sheet, the bondholder added.