The French government won court approval for its €9.7 billion ($10.7 billion) offer to buy out minority shareholders of Electricite de France SA, paving the way for the state to regain full ownership of the debt-laden utility.
Judges at the Paris court of appeals on Tuesday rejected legal challenges brought by disgruntled shareholders. EDF shares rose to €11.98 following the decision, just under the offer price. The finance ministry said it would reopen the tender later this month.
President Emmanuel Macron decided last year to fully nationalize EDF, which produces the vast majority of France’s power, as reliability issues at a dozen nuclear reactors and a government cap on electricity prices to mitigate Europe’s energy crisis have put a huge hole in the utility’s finances. Groups representing employee and other minority shareholders challenged the buyout bid, saying that the €12 per share offer undervalued the company.
The government is seeking to get full ownership of the utility — whose net financial debt soared 50% last year to €64.5 billion — to pave the way for tens of billions of euros in investment to upgrade its nuclear reactors, to help it build new plants and roll out renewable energies as France works to reduce its reliance on imported fossil fuels.
France already increased its ownership in EDF to 96% from 84% during the initial phase of its buyout tender at the turn of last year, before closing it in early February pending the outcome of the court challenge. It had said it would rapidly proceed to the mandatory squeeze out if it were to win the case.
This plan was confirmed Tuesday following the ruling, with the finance ministry saying in a statement it would reopen the offer between May 4-17 on the same terms of €12 per share, with the aim of withdrawing the utility from the stock market.
In rejecting the case, the court said the price at which EDF shares were first sold in 2005 — ranging from €33 for institutional investors to €25.60 for employees — shouldn’t be the only reference point for its nationalization in light of all the risks associated with the way the utility is regulated and its operational difficulties.
The court also rejected arguments that the offer price wasn’t fair and transparent in the way it was calculated and presented to the company’s board of directors.
A spokeswoman for EDF declined to comment on the ruling.
Source: BNN Bloomberg
