GDF Suez takes over Britain's International Power
French utility giant GDF Suez will take over its British competitor International Power, the groups said Tuesday, creating what they called the world's top independent power company.
France's Prime Minister Francois Fillon hailed the "forming of a world leader in electricity production" while analysts said it would also boost the British energy market.
GDF Suez will pay a dividend of 92 pence per share to International Power stakeholders for a total price of 1.4 billion pounds (1.68 billion euros, 2.2 billion dollars), the two firms said in a joint statement.
The move will transfer GDF Suez's international assets to the British firm to form a company called New International Power, listed on the London stock exchange, they said.
The French giant was formed in 2008 by the fusion of public enterprise Gaz de France and Suez, a private Franco-Belgian company. It specialises in processing liquefied natural gas and energy production.
Fillon said in a statement that the French state would retain its 36-percent stake in the company.
"This major industrial operation shows the vitality and dynamism of big French industrial businesses in a particularly strategic sector," he said.
Top British energy analyst firm Inenco said "the multi-billion pound merger will give International Power access to funds to support longer-term investment in the UK, helping to bridge the UK's fast-approaching energy generating gap."
International Power runs 45 power plants worldwide. It said it had revenues of some 4.2 billion euros in 2009, compared with nearly 80 billion euros for GDF Suez.
The announcement came as GDF Suez reported its first-half results: a net profit of 3.6 billion euros, up 9.3 percent on a year earlier, due mainly to a particularly cold winter, the company said in a statement.
The deal "creates the leading global energy player in IPP (independent power production) with strong market positions in Latin America, North America, UK-Europe, the Middle East, Asia, and Australia," GDF Suez's chief executive Gerard Mestrallet said in the statement.
He later told a telephone conference that the tie-up would create the biggest public utility in the world in terms of revenues.
International Power's chairman Neville Sims added: "The combined company will benefit from significant synergies, a strong pipeline" of new projects and "broader access to high growth markets for further expansion."
The companies forecast the tie-up would make them savings worth 197 million euros a year and yield combined turnover of 86 billion euros.
The tie-up followed months of negotiations after an earlier bid by the French company at the start of the year fell through.
The companies expect it to be wrapped up by early 2011 after International Power recommended the deal to its shareholders for approval.
"The deal should be seen as another indication that European energy markets are becoming increasingly integrated," said Inenco analyst Rebecca Seabury in a statement.
"This is a trend that is likely to continue," she added. "We could be looking at a fully integrated European market in the next 15-20 years."
© 2010 AFP