Electricite de France SA offered to buy the 50 percent it doesn’t own of its renewable energy unit EDF Energies Nouvelles SA (EEN) for as much as 1.5 billion euros ($2.16 billion) as solar and wind projects become more costly.
“Renewable energy projects are becoming more significant in size and more complex,” Thomas Piquemal, EDF’s chief financial officer, said on a conference call. “Development is becoming more industrial.”
EDF began considering the offer at the start of March, Piquemal said, rejecting the idea that the deal is a way for the world’s biggest nuclear reactor operator to hedge against a curtailment of atomic energy development worldwide.
“This doesn’t have much to do with the accident in Japan,” he said.
Paris-based EDF will buy the 25 percent stake held by Energies Nouvelles Chairman Paris Mouratoglou and offer to buy shares held by minority holders, according to a statement. The Paris-based utility has offered 40 euros a share in cash and 13 of its own shares for 11 in the renewable energy unit with Mouratoglou selling half his stake for shares.
The move by EDF, the world’s biggest nuclear reactor operator, follows Spanish utility Iberdrola SA (IBE), which last month offered to buy out minority investors in its renewable energy unit. EDF has said it wants to develop renewable energies such as wind and solar power while at the same time pursuing expansion of atomic energy outside France.
The cash offer is at a 10 percent premium over the last traded price of shares in EDF Energies Nouvelles while the share offer premium is 11 percent over six=month trading levels, according to an EDF presentation of the agreement.
The agreement will raise 2012 net earnings by 90 million euros and have a “limited impact” on debt ratios, EDF said. The utility plans to buy back shares worth between 300 million euros and 1 billion euros to prevent shareholder dilution.
EDF is planning 2.4 billion euros for investment in renewable energies for EDF Energies Nouvelles and hydroelectric operations in 2013 compared with 1.6 billion euros last year, according to Piquemal. This includes maintaining hydro dams.
“The market for renewable will be for bigger, more complex and more technical operations,” Mouratoglou said, adding that the unit will benefit in the future from EDF’s financial power. In the past, he has said the shareholding structure of EDF Energies Nouvelles offered more entrepreneurial freedom.
“We are investing as much in new nuclear projects as in EDF Energies Nouvelles,” Piquemal said, adding that “organic growth” will take priority over further acquisitions of renewable energy companies.
EDF Energies Nouvelles shares last traded at 36.64 euros. Shares in the utility, which has a market capitalization of 2.84 billion euros, have gained 16 percent since the start of the year. Mouratoglou will remain chairman of the unit and said current management will remain in place.
EDF Energies Nouvelles has said earnings this year would rise about 23 percent to at least 560 million euros on wind and solar projects in Europe. Earnings before interest, tax, depreciation and amortization for 2010 increased 36 percent to 455.1 million euros while net income including exceptional items rose 8.4 percent to 106.1 million euros.
EDF Energies Nouvelles is installing wind and solar capacity as the European Union aims to get 20 percent of its energy from renewable sources within 10 years, reducing dependence on oil and natural-gas imports. The company is targeting 500 megawatts of solar energy by the end of 2012. It plans to have 4,200 megawatts of installed wind capacity by that time.
To contact the reporter on this story: Tara Patel in Paris at firstname.lastname@example.org