France has offered to pay $9.9 billion for the nationalization of EDF

France has offered to pay $9.9 billion for the nationalization of EDF

France has offered to pay $9.9 billion for the nationalization of EDF

The state will pay 12 euros per share to purchase the remaining 16 percent of EDF, according to a statement issued by the French Finance Ministry on Tuesday. That is a 53% premium over the closing price of EDF shares on July 5, the day before French Prime Minister Elisabeth Borne announced the nationalization.

The company's shares, which had been halted since July 13 for specifics of the proposal, rose 15% to 11.75 euros as of 9:10 a.m. in Paris.

"Taking into account peers and market circumstances, the price is in the upper range," said Gregory Lafitte, an analyst at Tradition. According to him, most estimations for the offer price varied from 10.50 to 12.50 euros.

In the midst of Europe's greatest energy crisis in a generation, France wants to return debt-ridden EDF to full state ownership in order to bring household power rates under control while undertaking significant expenditures to lessen the country's reliance on imported fossil fuels.

The utility's older reactors are experiencing declining dependability, while new facility building has been hampered by delays and cost overruns. This dismal performance, combined with a government-imposed power price ceiling, has rendered EDF's debt load untenable.

The nationalization may reassure EDF's creditors about the company's financial health, but it will leave many additional issues for the successor to Chairman and Chief Executive Officer Jean-Bernard Levy, who will retire in September at the age of 67.

According to the announcement, holders of the company's convertible debt would be offered 15.64 euros for each bond. By early September, the offer will be submitted to Autorite des Marches Financiers.

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