Posted Jul 19, 2022, 8:51 AMUpdated on Jul 20, 2022 at 8:59 am
End of game for EDF’s stock market adventure. Some seventeen years after its introduction with fanfare on the Paris Stock Exchange, EDF is preparing to return to 100% in the bosom of the State. Announced by Emmanuel Macron during the electoral campaign as a prerequisite for the “nuclear renaissance” in France, with the renewal of the hexagonal reactor fleet, this project was formalized by Elisabeth Borne before Parliament last week and detailed this Tuesday by the government.
Concretely, the State puts on the table 9.7 billion euros to buy back the 15.9% of the capital of EDF which is in the hands of private investors and the 60% of convertible bonds (Océanes) of the group. , also held by the market.
The first stage of a vast restructuring
“This operation strengthens France’s energy independence. 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”, welcomed the Minister of the Economy, Bruno Le Maire. , in a press release.
This operation should allow EDF to improve its financing costs and to project itself into the construction of the new EPRs promised by Emmanuel Macron insofar as the latter must be financed entirely, or almost entirely by the State.
In detail, the government plans to file a simplified takeover bid with the AMF in early September. Minority shareholders, institutional investors but also EDF employees or retirees from the public group will then be offered the buyback of their shares at a price of 12 euros per share from the end of September for a few weeks. “We are aiming for a closing of the operation in mid-October to achieve a delisting of the shares and a withdrawal from listing at the end of October”, indicates the Ministry of Finance.
Despite the gaping gap with the introductory price of the title of 32 euros, the market has greatly appreciated. On Tuesday, the course of EDF closed up nearly 15%, at 11.70 euros. “The proposed price is totally in line with market expectations and the offer has a high probability of success,” said Nicolas Bouthors, analyst at Alpha Value.
The State only needs to convince a small number of investors to take part in the operation in order to carry it out successfully: starting from a rate of 90% state ownership of the group, the delisting of ‘EDF is insured. Moreover, the bonus offered to shareholders could be perceived as quite generous since it reaches 53%, if we take as a reference the EDF share price just before the Prime Minister’s announcements.
A reform with blurred outlines that worries
To carry out this operation, the government will nevertheless have to vote in Parliament the increase in the budgetary appropriations necessary for the operation, this via the vote of the amending finance law for 2022 currently being examined in the National Assembly. This is undoubtedly the most delicate step, because this “sanctuary” of EDF in the public fold is only a preliminary step to a much broader restructuring of the group. Its outlines are still vague, but the first version of this project, called “Hercule” or “Grand EDF”, had aroused a strong outcry in the opposition and among the EDF unions.
A scenario that could repeat itself. “We are for a public energy pole”, but “it will be difficult for us to vote for an amendment [de financement de la renationalisation, NDLR] without understanding what the project to come is, “immediately warns the deputy LFI Eric Coquerel, the president of the Finance Committee of the Assembly.