EdF sells EnBW stake to state

07 December 2010

Electricité de France (EdF) has agreed to sell its 45.01% stake in German power company EnBW to the state of Baden-Württemberg for €4.67 billion ($6.25billion).  


Philippsburg (Image: EnBW) 
Philippsburg (Image: EnBW)
In 2000 the French power group acquired an interest in Baden-Württemberg-based EnBW, which lays claim to being Germany's third largest energy company and includes four operating nuclear reactors in its generating assets. This gave EdF a foothold on the German energy market. After ten years of ownership, EdF was due to renegotiate its shareholders' agreement with fellow core shareholder OEW, which according to the French company would have taken place against a "complex and uncertain economic background".

A presentation by EdF accompanying its announcement identifies a German market with overcapacity characterized by sharply lower prices, and an unfavourable regulatory environment, as background issues to its decision to dispose of its EnBW share. In September 2010 the German government agreed to give operating nuclear reactors life extensions of 8-14 years, but at a price: a tax on nuclear fuel, which according to EdF will cost EnBW some €440 million ($589 million) per year, plus taxes levied on the additional output from the life-extended reactors to help finance the development of renewable energy, costing EnBW an estimated €298 million ($399 million), or €50 million ($67 million) per year, over the period 2011-2016.

Step forward the state of Baden-Württemberg. According to state prime minister Stefan Mappus, the government's move was prompted by the impending end of the existing shareholder agreement between EdF and OEW. "A change in EnBW's ownership structure was on the cards. This would have created growing uncertainty for the company during the coming months. We wanted to avoid that from the outset. We moved early and proactively, acting in line with our industrial policy responsibilities," he said. "In a nutshell, it is a good day for our state," he added.

According to EdF, the offer represents good value, made at a premium of 18.6% compared to EnBW's closing share price on 3 December. The offer consists of an initial downpayment of €1.5 ($2) per share, due to be made on 16 December, with the settlement of the balance to be made by April 2010.

An acquisition vehicle, Neckarpri GmbH, has been founded to purchase the EnBW stake for the state of Baden-Württemberg. The acquisition will be funded with a bond issue and will not impact the budget, the state promises. The state intends to make all, or at least a substantial part, of its EnBW shares public on the stock market in the medium term. OEW, which also holds 45.01% of EnBW, will remain a core shareholder and will not sell any shares to Baden-Württemberg, although the state reports that it liaised with OEW in advance of the transaction.

EdF promises that the transaction will not modify the "existing good industrial relationships" between the companies, and says the increased financial flexibility it will gain from the deal will contribute to its development in Europe and internationally. The strategy of EdF's International Group, aiming for 44% of sales outside France, will continue after the transaction.


Researched and written

by World Nuclear News


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