French energy firms approve merger plan

Gaz de France and Suez today announced details of their hastily-arranged all-French merger, designed to create a new leading player in energy and environmental services – and fend off a bid for Suez by Italian power company Enel.

With a combined market capitalisation of about €72bn, the new entity would be one of the world’s largest utilities companies.

The government-backed deal, which entails the privatisation of state-controlled GDF, also answers growing French concerns about security of energy supplies, both companies said.

Under terms hammered out in a heavy working weekend for the bankers, Suez will pay out a special dividend to existing shareholders, worth €1.25bn in total, before offering to swap one new Suez share for each GDF stock.

The plan was first announced by French Prime Minister Dominique de Villepin on Saturday, three days after Italy’s largest power company, Enel, confirmed its interest in Electrabel, Suez’s Belgian power unit.