EdF shares fail to shine

21 December 2005

The initial public offering of a 15% stake in French power utility Electricité de France (EdF) has failed to match expectations with a flat response on the stock exchange.

The shares, priced at €32 per share for private investors and €33 for institutional buyers ($41 and $43), were launched on 21 November but have failed to rise to levels much above the discounted retail price, leaving institutional investors feeling shortchanged.

The offering raised €6.35 billion ($7.49 billion) giving a market value for EdF of just under €60 billion, a figure that some analysts suggest is over the odds. This contrasts sharply with Gaz de France (GdF), which saw its debut shares leap by more than 20% on the first day’s trading.

Meanwhile, EdF has already announced plans to cut about 6000 jobs over the next two years, saying it would replace only "one in three or four" of 9000 employees due to retire over the period.

The plans are certain to evoke a strong response from the already riled unions and socialist politicians. However, shares in the giant, which have stayed flat since the launch, rose at the news.

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