PARIS: France’s financial markets regulator on Tuesday (Nov 22) approved the state’s plan to fully control heavily indebted national power utility Electricite de France (EDF) that is to spearhead efforts to relaunch the French nuclear industry.
The French state, which already owns 84% of EDF, filed a takeover offer with the regulator in October with a view to acquiring the remaining capital at €12 (RM56.35) per share.
The Financial Markets Authority (AMF) in a statement said the offer complied with stock market rules.
The acquisition of the shares is due to take place up to Dec 8. If the French state takes its holding to 90%, it can force other shareholders to sell.
The entire takeover operation is expected to cost €9.7 billion.
The French government in July signalled its intention to fully reabsorb EDF, which could be saddled with a record debt of €60 billion by the end of the year. It wants to build six new-generation nuclear reactors with an option to acquire eight others, with the strategic full acquisition of EDF aiming to send a signal of confidence.
France relies heavily on nuclear power for its electricity generation, but its oldest reactors are reaching the end of their service lives.
EDF’s efforts to build a new generation of nuclear power plants have faced massive delays and cost overruns, with some of its facilities unavailable due to corrosion problems, scheduled maintenance and strikes.
A price shield that protects French consumers from excessively high energy price increases has also contributed to its financial struggles.
Small shareholders, mostly former and current staff, have disputed the takeover bid, asking for at least €15 per share, but their legal action has so far been unsuccessful.
Some US funds holding EDF shares, including hedge fund TIG Advisors, were challenging the buyout price and asking for an increase, arguing that disclosures over the impact of government decisions in recent years on EDF's finances were insufficient.
The AMF has pointed out that is does not rule on price, but only assesses that the offer complies with French legislation.
Since the offer price was announced this summer, EDF shares have been trading just below it, showing the market was not betting on an increased bid.
Shares in EDF closed at €11.95 on Tuesday.
EDF booked a net loss of €5.29 billion in the first half after a profit of €4.17 billion a year earlier.
Since then, the firm has issued more profit warnings as its nuclear output has been hit as up to half its 56 nuclear reactors have been offline due to planned maintenance, strikes and work to repair corrosion. – AFP, Reuters
