EDF Chief Says Government May Cut Holding Over Time

By Tara Patel

Sept. 26 (Bloomberg) -- Electricite de France SA Chief Executive Officer Pierre Gadonneix said the government may cut its stake in Europe's biggest power producer and probably retain a majority holding.

``Over time, the portion held by the government will drop,'' Gadonneix said today in an interview on BFM radio. ``This balance corresponds well to the French culture and it hasn't hurt us in our international development,'' he said, adding that the government's role ensures long-term vision and development.

The French government, which owns 85 percent of the utility, sold a 2.5 percent stake Dec. 3 to raise 3.7 billion euros ($5.4 billion) for renovating the country's universities. That was less than the 3 percent stake for 5 billion euros announced prior to the sale by President Nicolas Sarkozy. Shares of the French utility have lost 37 percent of their value since the sale.

France's debt is expected to reach its highest level since 2005 next year in part because not enough government-owned assets were sold, the budget ministry said today.

``It's out of the question to sell shares at current market prices,'' French Finance Minister Christine Lagarde told reporters today in Paris, referring to all government holdings in French companies. ``We'll see what 2009 brings. It will depend on market prices.''

Nuclear Drive

EDF agreed two days ago to buy British Energy Group Plc for 12.5 billion pounds ($23 billion) as the U.K. accelerates a drive for atomic power. The Paris-based utility has also offered to acquire Constellation Energy Group Inc. with buyout firms KKR & Co. and TPG Capital LP for $6.2 billion, 32 percent more than Warren Buffett's MidAmerican Energy Holdings Co.

MidAmerican's offer to buy Baltimore-based Constellation for $4.7 billion, or $26.50 a share, ``does not provide adequate value to shareholders,'' EDF said in a public filing this week.

``I think there will be a stabilization of the capitalization of Constellation over the coming months,'' Gadonneix said in the interview. ``We won't sit back and wait for things to happen.''

The French utility has a 9.5 percent stake in a joint venture with Constellation to develop new generation reactor models called EPRs, or Evolutionary Power Reactors, that are capable of producing about 1,600 megawatts of electricity.

``I am determined that we will have a U.S. partner,'' Gadonneix said. ``We won't go alone.''

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net