Heat on Gaz de France to rescue Suez merger

23rd November 2006, Comments 0 comments

PARIS, Nov 23, 2006 (AFP) - Gaz de France, hoping to overcome the damage of muddle and delay over a merger with Suez by February, is to meet unions on Friday, the works committee said on Thursday.

PARIS, Nov 23, 2006 (AFP) - Gaz de France, hoping to overcome the damage of muddle and delay over a merger with Suez by February, is to meet unions on Friday, the works committee said on Thursday.

A court decision in favour of a procedural objection by unions has delayed and endangered the merger because of an approaching presidential election and has deeply embarrassed the government.

The head of GDF, Jean-François Cirelli, attempted damage limitation in remarks to the newspaper Les Echos on Thursday, saying he hoped the deal could now be completed in February.

Cirelli, who was the target of terse injunctions from the government on Wednesday to come up with a solution, said: "Today, we want to finish from February."

Suez has also said curtly that it was waiting for proposals from GDF and that it was "necessary to define a new timetable in close collaboration with Suez".

But Cirelli's target of February is only weeks before the first round of the French presidential election on April 22.

The UMP party chairman of the parliamentary economic affairs commission, Patrick Ollier, who strongly backs the merger, said "it is regrettable that it is so late" but insisted that the deal would go through.

But a source close to Suez said: "That will take us to a general meeting of shareholders in February, in the middle of the election campaign".

Trades unions said that they had won a "great victory".

At CM-CIC brokerage, analysts commented that the Suez-GDF plan had been "literally torpedoed" and that "the opponents will use this with relish".

The plan for Suez to absorb GDF is highly controversial, is opposed by the left-wing opposition, and has also caused tensions between strongly rival factions within the governing right-wing UMP party.

The likely UMP candidate for the French presidency, party leader Nicolas Sarkozy, has conflictual relations with Prime Minister Dominique de Villepin who backs the merger.

Sarkozy was reticent about the deal several months ago but persuaded many of his supporters to approve legislation permitting the privatisation of GDF.

A court ruled late on Tuesday that GDF had not provided adequate information to trades unions, as required by law, and prevented the board from approving the deal on Wednesday.

The unions, represented in the works council, are strogly opposed to the plan, and on Thursday the committee said that GDF management wanted to meet the committee on Friday.

The purpose would be to "agree ways" of providing adequate information to workers on the job implications of the deal.

The Suez-GDF plan was widely seen as a pre-emptive defence against a possible hostile bid by Italian energy group Enel. Many analysts believe that predators are following the efforts to rescue the merger closely with a view to biding for Suez if the deal falls through.

Copyright AFP

Subject: French news

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