France is already close to taking over EDF. The Czech government is still secretive about CEZ

The French and Czech governments announced last summer that they would acquire key electricity production sources under their wing. And while they are almost done in France, in the Czech Republic we still don’t even know what exactly the government wants to do with ČEZ, let alone what a possible “nationalization” should look like.

France’s finance ministry said on Friday that the country already owns 92.71 percent of EDF, France’s largest electricity generation and distribution company. This gives the government of Emanuel Macron the right to start a so-called squeeze out.

Or also a mandatory share buyback, which is more reflective of what it will be about now. The government sets the price per share, which the remaining shareholders will have to accept. Or go to court.

EDF was partially privatized in 2005, when part of its share capital was listed on the stock exchange for 33 euros per share. The government last year offered minority shareholders 12 euros per share, which was 53 percent more than the share price on the stock exchange at the time.

On the other hand, the company was valued the same as EDF’s share price was even before the French government announced a cap on energy prices last November.

This caused EDF’s stock market value to plummet, as shown in the following chart. And it was the impending lawsuits from the shareholders that forced the government to buy out a minority stake, which would also give the government full control over energy pricing in the country.

Edf share price development in the last five years | Source: Google Finance

However, some minority shareholders complained that the company was undervalued in the expert opinion and considered the takeover price of 12 euros per share insufficient. They appealed to the court, which slows down the entire process of 100% takeover, which was originally supposed to be completed by the end of the year. It is now clear that he will have to wait for all court decisions, which will not come before May.

“We have asked that the ouster not take place before the decision of the Court of Appeal on the merits, which will be handed down on May 2 at the latest,” French newspaper Le Monde quoted Colette Neuville, president of the Association for the Defense of Minority Consumers, as saying on Monday.

The Czechia should monitor the situation in France for many reasons. On the one hand, a tender for the completion of the nuclear power plant in Dukovany is currently underway, in which EDF applied, and mainly the Czech government is also planning a transformation of ČEZ, including ownership. Prime Minister Petr Fiala announced the intention to get key production sources of electricity in response to the sharp increase in prices last summer.

And last week he confirmed his intention. “It is our intention to gain greater state control over the energy infrastructure as part of strengthening energy security,” he told ČTK.

But while they are almost done in France, in the Czech Republic it is still not known when and how “greater control over the energy structure” will be carried out. The only thing that is clear is that attention will be focused mainly on ČEZ as the largest producer of electricity and operator of key nuclear resources.

Prime Minister Petr Fiala and ČEZ head Daniel Beneš regularly discuss the method of carrying out the transformation of ČEZ. The game can be either a division into the production and sales part of ČEZ and control of the production part, or the purchase of the share from minority shareholders.

For them, however, the prime minister’s meetings with the head of a publicly traded company are a thorn in the side, as are the steps that in the last six months led to a drop in CEZ shares by roughly a quarter to 818 crowns per piece on Monday. And this is mainly due to the windfall tax and ceilings on excessive income from electricity production.

Development of ČEZ shares in the last six months on the Prague Stock Exchange | Source BCPP

“France already has a 92.71 percent stake in EdF, in summer 2022 it was 83.9 percent. In six months, France bought 9 percent of the shares on the market. They just put an offer on the market. For me, a precedent that is hard to dispute for the Czechia. They are in the European Union, the same electricity market, the same strategic interests in nuclear energy. They stick to the rules,” says Michal Šnobr, an energy consultant, J&T employee and one of CEZ’s most vocal minority shareholders.

Prime Minister Petr Fiala repeatedly promises that the details of CEZ’s transformation should be on the table by the middle of the year. The new state energy concept, which is currently being processed by the Department of Industry Minister Jozef Síkela, will probably also be based on them.

For now, however, the nervousness of the shareholders, who are beginning to unite in the fight against the latest steps of the state, is only growing. It is therefore likely that the process of taking control of critical infrastructure by the state will be accompanied by many lawsuits and arbitrations in the Czech Republic as well.

The article is in Czech

Tags: France close EDF Czech government secretive CEZ

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