kx9tjob4sbvhf35hgukq468n_media_dl_1.png European Energy Exchange

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(Bloomberg) — Electricite de France SA agreed to sell its renewable power businesses in the US and Canada to KKR & Co. for about $4.2 billion as the French state-owned utility seeks to contain debt while it builds new nuclear reactors at home. 

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EDF may receive additional payments of as much as $390 million, in a deal that will its reduce net financial debt by around $5.5 billion, the French company said in a statement late Tuesday. EDF said on June 26 that KKR had agreed to buy the portfolio of 5.6 gigawatts of renewable assets, without disclosing the financial terms.

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The aim of the transaction “is to maximize EDF’s financial capacity in order to roll out new, competitive, low-carbon solutions” across nuclear power, hydroelectricity and renewables, EDF Chief Executive Officer Bernard Fontana said in Tuesday’s statement.

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Takeovers in the US power industry have picked up as energy producers and utilities race to meet insatiable demand from massive data-center projects. In May, NextEra Energy Inc. agreed in May to pay about $67 billion in stock for Dominion Energy Inc. in the largest power acquisition ever.

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EDF is raising funds to help finance the construction of nuclear reactors in France and the UK to replace part of its aging atomic fleet. That investment, costing tens of billions of euros over the next two decades, coincides with falling French power prices, putting the utility’s balance sheet under pressure. 

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While EDF reduced its net financial debt to €51.5 billion last year, the increase in capital expenditure comes as the utility foresees a slight drop in profits this year due to falling prices.

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To limit cash outflows, EDF outlined plans to save €1 billion on annual expenditure by 2030, and recently sold a gas-fired power plant in Brazil for about €230 million. The company is also seeking to divest its renewable energy assets in China, and part or all of a small unit that’s developing hydrogen projects.

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To raise more funds, the French nuclear giant is also considering selling a minority stake in its Italian unit Edison SpA. However, the plan has been disrupted by the Iran war and the damage to Qatari gas-export plants that supply large volumes of the fuel to Edison.

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The sale of North American assets to KKR is expected to close during the second half of the year, subject to regulatory approvals, EDF said.

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(Updates with deal timetable in last paragraph)

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