Announced in early July, the nationalization of EDF should take place by September. The State will pay 9.7 billion euros in the context of a public purchase offer (OPA) to acquire the 16% stake in EDF that it does not already own. With this nationalization, the government seeks to facilitate the financing of the renewal of the French nuclear fleet, while EDF is currently in great financial difficulty.
Modalities envisaged for the nationalization of EDF
Prime Minister Elisabeth Borne announced on Wednesday July 6 during her general policy speech to the National Assembly the government’s desire to nationalize EDF. With this operation, the State, which currently holds approximately 84% of EDF’s capital, would become the company’s sole shareholder.
Created in 1946 by the law on the nationalization of electricity and gas in the form of a public industrial and commercial establishment (EPIC), EDF became a public limited company in 2004 and was partially privatized the following year. , 15% of its capital having been listed on the Paris Stock Exchange.
The government has since clarified the terms of this operation: it will, probably by the beginning of September, propose to current shareholders 12 euros per EDF share. This is a 53% premium to the stock price just prior to the US statement. Terminal (7.84 euros). The total cost for the public finances of this takeover bid (OPA) should reach €9.7 billion.
The entity initiating the takeover, whether a company or, as here, the state, usually offers a prime by offering a price higher than the last quoted price. It is, in fact, aencourage shareholders to tender their shares.
Reasons for the nationalization of EDF
Several factors may explain the government’s decision to “nationalize” 100% EDF. Bruno Le Maire, Minister of the Economy, Finance and Industrial and Digital Sovereignty, first of all insisted on the strategic issues of such an operation. In a context of strong tension on the energy markets, particularly since the outbreak of the war in Ukraine, he underlined that the nationalization of EDF ” strengthens France’s energy independence “, before continuing:” it gives EDF the necessary means to accelerate the implementation of the new nuclear program wanted by the President of the Republic, and the deployment of renewable energies in France “.
Nationalization of EDF: an a priori limited impact for individuals
The nationalization of EDF should not have a major impact in the short term for individuals. Indeed, the State is already the majority shareholder of the company: it will therefore be able to continue to impose its choices on it. EDF will also always be subject to the regulations in force. For example, it will have to continue to sell part of the electricity produced at a fixed rate as provided for by Regulated Access to Historical Nuclear Electricity (ARENH).
For some observers, it is above all the very seriously deteriorated financial situation of EDF which explains the government’s decision to nationalize (or nationalize) 100% of the company. The latter is, in fact, indebted to the tune of 44 billion euros and its level of indebtedness is expected to increase further in 2022. Significant losses are also expected at the end of the year. This extremely difficult situation can be explained in particular by the tariff shield: while EDF’s supply costs are increasing, in a context of strong pressure on energy prices, its revenues are not keeping up. This cyclical tension adds to industrial difficulties (shutdown of several power plants, maintenance and overhaul of several reactors, etc.).
Under these conditions, it was becoming increasingly difficult for EDF, as a listed company, to finance itself and to implement the investments necessary for the renewal of the French nuclear fleet. The 100% control of EDF and the delisting should also facilitate the reform of the group recommended by the executive.