French utility firms agree merger
September 3, 2007
French utility groups Suez and Gaz de France (GDF) have agreed to merge to create one of the world's largest energy firms, worth 70bn euros (£47bn).
Both firms have been trying to merge since 2006, but a final deal was agreed over the weekend following meetings between both firm's boards.
Under the terms of the deal, the French government will hold more than 35% of the new firm - to be called GDF Suez
The deal has faced opposition from unions who fear job losses.
The French government currently owns 80% of GDF, and was keen to prevent Suez from merging with the Italian energy company Enel.
Terms
The "merger of equals" deal - means that 21 Gaz de France shares will be exchanged for 22 Suez shares, the firms said in a joint statement.
Suez will divest 65% of its water and waste management operations by placing shares on the stock market.
There had been fears that the talks, between Suez and the office of French President Nicolas Sarkozy, could collapse, following disagreement over the terms of the tie-up.
As Suez has expanded far faster than Gaz de France since the original plan was announced in 2006, new terms were needed to do justice to Suez investors, analysts said.
Unions have feared that not only could it lead to job losses but also that it could reduce competition and therefore push up energy prices for consumers.
Print this page