EDF shares jumped following reports that the French government is prepared to pay more than 8 billion euros (£6.8 billion) to nationalize the energy company.
French Prime Minister Elisabeth Borne last week announced plans to take full control of the electricity group in a bid to control soaring household electricity bills.
The cost of buying the 16% of EDF shares the government does not already own, plus outstanding convertible bonds, could reach 10 billion euros, Reuters reported.
The reported move sent EDF shares up 9.4% in early trading before later settling 6% to €10.26, valuing the company at €39.7 billion.
EDF, which is building the Hinkley Point C nuclear power station in Somerset, dominates the French electricity market, the country depends on it for nuclear energy. EDF’s nuclear production represents 69% of France’s electricity supply in 2021.
However, that level of supply is expected to drop to the lowest level in more than three decades this year due to a combination of maintenance, refueling and repairs at 12 reactors across France.
The French government is trying to reduce its reliance on overseas energy imports as Europe scrambles to keep the lights on this winter.
There are growing fears that Russia could restart gas supplies to Europe via the Nord Stream 1 gas pipeline after maintenance began on Monday. It is due to end on July 21.
French Finance Minister Bruno Le Maire described a complete Russian gas cut as the “most likely scenario”. France sources around 17% of its gas from Russia but is not as hard hit by supply disruptions as neighbors like Germany.
The Mayor also said EDF Chairman and CEO Jean-Bernard Lévy, who took the reins in 2014, will step down.
Antonio Totaro, senior director at Fitch Ratings, said the nationalization is “largely good news” for EDF and the company’s bondholders, as it signals state commitment.
He said: “EDF has ambitious nuclear development plans, both in France and abroad – and this announcement of nationalization could be read alongside [French president Emmanuel] Macron’s nuclear renaissance goals.
In February, Macron said France would build at least six new nuclear reactors over the next few decades.
In the UK, EDF closed a unit at Hinkley Point B last week and another is due to close on August 1.
Hinkley Point C is not expected to be operational until 2027 due to construction delays and EDF is awaiting a planning decision on the Sizewell C development in Suffolk, which was postponed until July 20 last week.