The French government has won court approval for its plans to regain full ownership of Electricite de France (EDF). The National Assembly then passed a bill seeking to prevent the government from subsequently privatising the company.
Judges at the Paris court of appeals rejected legal challenges brought by shareholders seeking to block the government’s €9.7bn ($10.7bn) offer to buy out minority shareholders of EDF. The court "rejected all of the plaintiffs' demands", according to a document cited by Reuters.
France in early 2022 increased its ownership in EDF from 84% to around 96% during the initial phase of the buyout tender, before closing it pending the outcome of the court challenge. The French state currently owns 95.82% of the share capital and at least 96.53% of the voting rights of EDF, The Finance Ministry said it would reopen the tender later in May.
In 2022, President Emmanuel Macron decided to fully nationalise EDF, which is facing financial difficulties in the wake of technical issues at a number of nuclear reactors and a government cap on electricity prices. The association for the defence of minority shareholders (ADAM), representing employee and other minority shareholders, challenged the buyout bid, saying that the €12 per share offer undervalued the company.
The court ruled that the price at which EDF shares were first sold in 2005, which ranged from €33 for institutional investors to €25.60 for employees, should not be the only consideration for its nationalisation given the risks associated with the way the utility is regulated and its operational difficulties. The court also rejected arguments that the offer price was unfair and not transparent in the way it was calculated.
EDF’s financial debt rose 50% last year to €64.5bn. Government investment is needed to upgrade existing nuclear reactors, build new plants and expand renewable energies.
A few days after the court ruling, the National Assembly passed a bill, at second reading, to protect the EDF group from being subsequently privatised. The purpose of the bill is to allow 100% ownership of EDF's capital by the State and to make the company a limited company "of national interest". It was adopted by 127 votes to 89 with one abstention.
The government has launched a public purchase offer (OPA) onEDF whereby the state will hold 100% of the capital of the company. The proposed law aims to prevent the state, after taking over the group, from dismantling the company and privatising its most profitable activities (such as renewable energies) while investments in nuclear power would continue to increase finance with public money. Some parliamentarians are concerned that such a reorganisation of EDF may be planned.
At the first reading of the bill, the text proposed to:
- nationalise EDF in order to guarantee public ownership and the unity of the public energy service;
- make EDF a "unified public group" (instead of a limited company) and list its activities;
- allow ‘full’ ownership of EDF's capital by the State on 1 January 2024 (instead of the ‘more than 70%’ currently listed in the energy code);
- allow EDF employees to hold company capital, up to a limit of 2%;
- extend the price shield to very small businesses (TPE), including bakers.
The Senate, at its first reading, deleted Article 1, which provided for the renationalisation of the company but maintained the objective of the state holding 100% of EDF's capital in January 2024 and replaced the designation of EDF as a ‘unified public group’ by that of a ‘public limited company of national interest’.
At the second reading, the deputies did not reverse the deletion of Article 1 but restored the list of missions carried out by the EDF group (production, transport, distribution, etc), which had been removed by the Senate. Through another amendment, they rewrote the provisions on employee access to EDF's capital. At the end of the takeover bid process, the new EDF employee shareholding must cover at least 1.50% of the capital of the company for an initial price of €12 per share. Finally, the tariff shield was extended by the deputies to new beneficiaries – to SMEs, to all local authorities with less than 50,000 inhabitants and to all low-rent housing organisations.
The bill must now go for a second reading to the Senate.
Image: Inside the National Assembly in Paris where the French government has won court approval for its plans to regain full ownership of French utility EDF (courtesy of Metronews)