French power utility Electricite de France S.A. is planning to buy the remaining shares of its renewable energy subsidiary EDF Energies Nouvelles, shares that the former does not own, for as much as 1.55 billion euros ($2.16 billion).
EDF, which owns only half of EDF Energies Nouvelles, is offering to purchase the remaining 50 percent stake from minority stakeholders either through cash, at 40 euros per share, or through share swapping.
For the stock offer, the utility plans to give 13 of its shares in exchange for 11 in the subsidiary.
The Mouratoglou Group of the subsidiary’s chairman, Paris Mouratoglou, has agreed to sell its 25.1 percent stake in the subsidiary for a 50-50 cash and shares deal, EDF said.
The cash offer represents a premium of 10 percent to last Thursday’s closing price of 36.64 euros per share, and 23 percent over the past six months. On the other hand, the stock offer represents a 12.6 percent premium on the previous close or an 11 percent premium over six months.
The tender offer will be launched on May 26 and will end June 15. EDF said that the buy-out it will be finalized on July 5.
Energies Nouvelles and EDF will resume trading today after requesting suspension on the Paris stock exchange last April 8 following the announcement of the buy-out, market operator Euronext said.
Renewable energy
The French utility says the move will strengthen its position in a renewables market that is seen as entering “a new phase of development.”
The renewable energy sector has reportedly been undergoing large changes as projects get bigger and more complex.
“The increase in its stake in EDF Energies Nouvelles will allow EDF Group to fully benefit from the future value creation of renewable energies,” the utility said in a statement.
EDF predicts that the European renewable energy market will grow 6 percent annually while growth in North America will be at 9 percent by 2030.
EDF is said to have the fifth largest installed capacity for renewable energy worldwide, with 25 gigawatts. Renewables represented 19 percent of its energy mix in 2010. Wind energy accounts for 84 percent, followed by solar energy with 9 percent. Nuclear energy accounted for 55 percent.
The utility said it spends nearly 40 percent of its development capital on renewable energy projects, 80 percent of which goes to Energies Nouvelles, the alternative energy arm.
EDF said it is planning to spend 2.4 billion euros in Energies Nouvelles and own renewable energy assets in 2013.
Based on its full-year report for 2010, the subsidiary has 3,335.2 MW in service or under construction, which was in line with its target of reaching 4,200 MW by 2012.
Solar installations capacity tripled in 2010 over the previous year.
Easing pressure
Experts say the deal is meant to help nuclear giant EDF ease pressure on its share prices amidst growing concern over the safety of nuclear energy in light of Japan’s problem with its reactors.
The utility’s shares started to sink on March 11 following the earthquake that struck a Japanese coast and generated a tsunami that damaged reactor cooling systems at Fukushima.
Its share prices hit 27.45 euros apiece last March 18 when the reactor crisis was at its peak.
While EDF shares were losing steam, the share prices of its renewable energy division were actually climbing. Share price was at 35.81 euros apiece when trading closed last March 18.
Opening prices for Energies Nouvelles’ shares as of 9:48 a.m. in Central European time today was 40.21 euros per share, a 9.74 increase over the last closing price prior to the deal suspension. EDF share prices is at 27.69 euros a piece, a slight 1.55 percent increase from April 7 prices.
Thomas Piquemal, EDF’s chief financial officer, said the deal was not a precaution in regard to criticism over the future of investments and development of nuclear energy projects worldwide.
