A crucial step has just been taken for the renationalisation of the group.
A turning point but not the end of the soap opera: the French state has crossed the threshold of 90% of EDF’s capital, a crucial step make a public purchase offer (OPA) it intended to renationalise the electric giant to revive it, but the outcome of which still depends on a court decision.
“On January 19, 2023, the State exceeded the threshold of 90.00% of the capital and theoretical voting rights of the EDF company,” indicates a statement from the Ministry of Economy published on Friday.
The operation, costing 9.7 billion euros, is strategic for the State, which wants to build six new generation EPR nuclear reactors, with an option for another eight.
On the stock exchange, this is a decisive step taken by the state in the context of its takeover bid (OPA), the expiry of which had been postponed indefinitely due to a legal action against minority shareholders.
From now on, at the end of the offer, it will be able to initiate a forced withdrawal of EDF shares from the Paris Stock Exchange, i.e. force the remaining minority shareholders to sell their shares, because they now represent less than 10% of the capital and of voting rights.
However, the renationalisation, decided last summer when the State held 84% of the capital, has not yet been completed and even seems to have suffered a considerable delay.
The takeover bid, which opened on November 24, was originally scheduled for December 22. But the AMF decided on December 7 to postpone this deadline “pending the decision of the Paris Court of Appeal on the request for suspension” presented by a group of minority shareholders dissatisfied with the proposed price.
“We see that the situation is getting bogged down, when it would be enough to find an agreement with a price increase suitable for all parties, for the appeals to cease and the operations to be successful”, says Martine Faure, leader of the small rebel carriers, all ‘origin of several lawsuits filed for months.
These small shareholders are mostly employees or former retirees of EDF, for whom the redemption price, currently set by the state at 12 euros per share, is insufficient.
This price has been validated by an independent expert’s report, but small shareholders believe that the company is undervalued and that it has been unfairly penalized in its revenues by a state-imposed mechanism (Arenh) l forcing them to sell electricity at low prices at alternative suppliers.
Tense financial situation
The Borsa Observatory had authorized the launch of the takeover bid on 22 November precisely on the basis of this report. But on December 2, an appeal was filed for the annulment of this decision before the Paris Court of Appeal, accompanied by a request to suspend the execution.
The hearing to consider this suspension is set for January 25th. Another hearing on the merits is then set for 23 March at the Chamber of Economic and Financial Regulations of the Court of Appeal.
“We are on a takeover bid which overall seems to be working. The impact will be relatively minimal,” however estimated with AFP Alexandre Malric, director of energy for CGI Business Consulting.
“For me it’s really a non-subject,” added Nicolas Goldberg, energy expert at the consultancy Colombus, according to whom the real problem is “the regulation of nuclear sales prices and the financing of the new” reactor program EPR wanted by the government.
Arenh, initially created to favor the emergence of competition between electricity suppliers, is regularly denounced by EDF as a “poison” weighing on its finances. The government is working on another device to replace this mechanism, which will end on December 31, 2025.
More generally, the question remains unanswered as to how the state, when it will be the sole commander on board the company, intends to give EDF the means to build six new generation EPR nuclear reactors, with an option for another eight.
This project will cost tens and tens of billions of euros, while EDF’s finances are burdened by a record debt of nearly 60 billion.