Wednesday, August 17

EDF shares surge as France eyes nationalization cost of 8 bln-10 bln euros

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PARIS — EDF shares surged on Tuesday, after two sources told Reuters that the French government was poised to pay more than 8 billion euros ($8 billion) to bring the power giant back under full state control.

One of the sources said the cost of buying the 16% stake the French state does not already own in EDF could approach 10 billion euros, when accounting for outstanding convertible bonds and a premium to current market prices.

EDF and the economy ministry declined to comment on the Reuters report.

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Citing the report, JPMorgan said in a note the price range would translate in an offer of 10.2-12.7 euros per share, or a premium of up to 32% on Monday’s close.

“(This is) in line with our view that the government may make an offer close to 12 euros per share,” it said.

EDF shares were up 5% early in the session at 10.14 euros, making them the best performer on France’s SBF-120 equity index which was down 0.8%, having earlier risen as much as 9%.

The French government, which already owns 84% ​​of EDF, announced last week that it would fully nationalize the company, which would give it more control over a revamp of the debt-laden group while contending with a European energy crisis.

One of the sources told Reuters France may have to announce the terms of the offer over the coming weeks before the holiday period in August, to ensure it can have a deal in October or November.

“Time is pressing for the government in the current energy crisis,” said JPMorgan, noting that the exceptional amount of outages on EDF’s nuclear fleet this year — half of its reactors are currently offline — is set to reduce output to the lowest level in more than three decades.

($1 = 0.9991 euros) (Reporting by Mathieu Rosemain and Pamela Barbaglia; Writing by Silvia Aloisi; Editing by Jan Harvey)