Power utility firms Suez, Gaz de France to merge into GDF Suez

03 September 2007

After 18 months of talks Franco-Belgian power utility group Suez and French-governement controlled Gaz de France (GDF) have agreed to merge through an alomost one-for-one share swap to create a global energy major, GDF Suez.

The merger of the Suez, the world''s second- largest water company that also has energy operations, and Europe''s biggest natural-gas network operator, both based in Paris, would create a utility second only to Electricite de France SA in Europe.

Though they have been attempting to combine into one entity since 2006, a final agreement was eventually resolved over the weekend following meetings between the boards of the two companies.

Analysts had feared a breakdown in talks between Suez and the office of French President Nicolas Sarkozy due to disagreements over the terms of the merger as Suez had shown faster growth than Gaz de France since the merger proposal was unveiled in February 2006, requiring the original terms of the merger to be renegotiated.

Now valued at about €56 billion euros ($76 billion), the merger was conceived to pre-empt a possible bid for Suez by Enel SpA of Italy and also to create Europe''s second-largest power utility.

The new plan was also conceived in deference to the wishes of French President Nicolas Sarkozy, who just last week favoured a merger of Gaz de France with only the energy business of Suez.