Czech nationalisation of ČEZ takes shape as management proposes key takeover step

The management of energy group ČEZ has proposed setting up a new subsidiary into which it wants to carve out energy sales and distribution, trading and energy services from the current structure. This is the first step towards the planned nationalisation of the company. The company would retain a 51 percent stake in the new subsidiary and offer the remaining part to investors. The proposal will be decided by the company’s June general meeting. This follows from information published on ČEZ’s website. The proceeds from the sale of the stake in the subsidiary should then help facilitate the buyout of ČEZ’s minority shareholders.

The state currently holds around 70 percent of ČEZ shares, with the remainder owned by minority shareholders. Nationalising the company is one of the declared goals of the current government, and buying out minority shareholders’ stakes would make the state the company’s sole owner. Prime Minister Andrej Babiš (ANO) recently indicated that the cabinet wants to complete the entire process of taking full control of ČEZ by the end of the current electoral term in 2029 at the latest.

"The board of directors’ proposal is the culmination of the strategic direction approved by shareholders at the general meeting on 28 June 2022 as part of the ČEZ Group’s business concept. This envisages differentiating the focus on generation and customer-facing areas, with the related restructuring and optimisation of the ownership structure and management of ČEZ Group assets," the company said.

At the same time, however, it acknowledged that the board of directors also took into account the state’s intention to push through the buyout of minority shareholders’ shares.

The new subsidiary should include, for example, ČEZ Prodej, ČEZ Distribuce, GasNet, ČEZ ESCO, trading companies and telecommunications company Telco Pro Services. iRozhlas and Radiožurnál reported today that these divisions fall under deputy chairman of the board Pavel Cyrani, who is also expected to lead the new company.

According to ČEZ, the price of the stake it wants to offer investors could reach 150 billion crowns, the radio station said, which would significantly reduce ČEZ’s debt. This should then make it easier for the company to later buy out the existing minority shareholders in the parent company as a whole.

Industry and Trade Minister Karel Havlíček (ANO) has explained the plan to nationalise ČEZ as a need to give the company greater freedom for further investment. According to him, the buyout of minority shareholders should be financed entirely by the company from its own resources. The final price will depend on the current market value of the shares, but Havlíček has previously admitted that costs could be around 250 billion crowns.

The opposition has long criticised the plan to nationalise ČEZ. It says it will have a significant impact on both the company’s debt and the state budget, as ČEZ would no longer pay dividends from its profits. “It makes no economic sense,” former Industry and Trade Minister Lukáš Vlček (STAN) said previously. Some analysts also view the plan with mixed feelings.

ČEZ earned 27.4 billion crowns last year, with the company’s net profit falling by 1.7 billion crowns year on year. Its operating profit and revenues also declined year on year.