GDF-Suez merger to be finalised in December

20th June 2006, Comments 0 comments

PARIS, June 20, 2006 (AFP) - French Finance Minister Thierry Breton underscored the government's determination Tuesday to conclude a volatile merger of state-controlled Gaz de France (GDF) and the energy and utilities group Suez, saying the deal should be finalised in December.

PARIS, June 20, 2006 (AFP) - French Finance Minister Thierry Breton underscored the government's determination Tuesday to conclude a volatile merger of state-controlled Gaz de France (GDF) and the energy and utilities group Suez, saying the deal should be finalised in December.

"The calendar that has been fixed is one which should lead to a complete merger of the two companies Suez and Gaz de France at the end of the year, in the month of December," Breton told France 2 television.

A provisional timetable published in February when the merger plan was announced provided for approval by shareholders at extraordinary general assemblies in mid-December.

Suez shares gained in midday trading on the Paris stock exchange following Breton's remarks, while GDF was weaker on a market that was broadly lower overall.

Prime Minister Dominique de Villepin, facing stiff opposition to the deal, was forced Monday to delay until September a parliamentary vote that would allow for the privatisation of GDF, a pre-requisite for the two groups to merge.

According to the merger proposal, the French state would retain a 34-percent stake in GDF, while a law voted two years ago fixed its minimum level at 70 percent.

Asked on France Info radio Tuesday about the ultimate size of the state's holding, Breton declined to answer.

He said only that because of rising energy prices, an energy company "had to be a giant to be able to oblige suppliers to accept prices that conform to consumers' interests".

The government is now to examine a draft law on GDF's privatisation before sending it to parliament for a vote in September.

Breton told France 2 television: "We are within the parliamentary time frame, there will then be general assemblies of the companies, and it will be the shareholders that will vote" in the end.

The French government unveiled a plan for GDF to be absorbed, and thus privatised, by Suez after it emerged that the Italian energy group Enel was poised to make a hostile bid for Suez.

But the Suez-GDF merger is opposed by many lawmakers and trade unions in France, and on Monday the European Commission launched an in-depth inquiry into the plan, saying the transaction could undermine competition on the French and Belgian markets.

French opponents, including some within Villepin's UMP party, want GDF to remain a state enterprise because they believe its privatisation will result in higher gas prices.

In Belgium, Enel seeks to buy the Suez electricity subsidiary Electrabel, while GDF also has activities in gas services and distribution in that country.

French bosses said Tuesday that the GDF-Suez merger plan made sense on an industrial level but stressed that it should not come at the expense of consumers, whether individual or corporate.

Philippe Rosier, head of an energy study group at the employer federation Medef said: "We must make sure that economic advantages benefit consumers".

Rosier, managing director of Rhodia Energy, a division of the chemical group Rhodia specialized in the purchase and management of energy, echoed Breton's comments on the need for energy groups to acheive a critical mass in order to negotiate prices with suppliers.

"Compared with mastodonts that are now being created, GDF is a little company," he added.

The specialist also warned that current liberalisation of European energy markets "has everyone headed for a stone wall, because it is based on the short term and lacks coordination at the European level".

In midday trading on the Paris stock exchange, Suez shares had gained 1.36 percent to EUR 29.90, while GDF showed a loss of 0.70 percent at 25.52.

The CAC 40 index of leading shares was 0.26 percent lower overall.

Copyright AFP

Subject: French news

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