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Suez shares wilt amid uncertainty over merger with Gaz de France
AFP
PARIS
Petroleumworld.com 06 13 06Shares in the French energy and environmental services group Suez fell Monday amid deepening uncertainty over a defensive plan for it to buy state-owned Gaz de France (GDF) to ward off a possible hostile bid by Italian electricity group Enel.
Shares in Suez were down 2.06 percent to 30.40 euros in early afternoon trading on the CAC 40 exchange in Paris.
Suez said it had no plans to sell any of the Belgian power group Electrabel's assets to Enel, following a press report that said Enel hopes to acquire Electrabel as part of Suez's merger with GDF.
The report in the French business daily Les Echos said Enel was no longer considering a full takeover bid for Suez, but would like to form a partnership with Suez for Electrabel, with each company owning a 40 percent stake in the division.
A Suez spokesman said: "Electrabel is our key electricity business for Europe. There is nothing to negotiate over Electrabel, which we just acquired in order to reinforce our group. We have only one project, our merger with Gaz de France."
"The idea that we could do a three-way alliance is completely utopian," he said, adding that Suez had not been contacted by Enel.
"Once the merger is completed, we will be able to form marketing and industrial partnerships with other companies, Enel or any other interested group, but not with any exchange of stock," the spokesman said.
Suez took full control of Electrabel late last year. A few months later, in order to stave off an expected Enel bid for Suez, the French government announced plans to merge Suez with GDF.
Italian Prime Minister Romano Prodi was due to meet with President Jacques Chirac in Paris on Tuesday, amid speculation that the French parliament could delay or even block the Suez-GDF merger in order to avoid fresh political conflict.
France's Socialist opposition and labour unions have vowed to contest the plan, which would require new legislation allowing the French government to lower its GDF stake below 70 percent, a level it promised not to go under when GDF was partially privatised last year.
Jean-Louis Borloo, minister of labour and social affairs, said Monday that a Suez-GDF merger must be proved to be of a "vital and strategic nature" for the government to overturn its policy and reduce its stake in GDF.
He said that a future parliamentary vote on the question must be respected.
According to Les Echos, Enel believes that the risks to the Suez-GDF merger could put pressure on Suez to consider talks.
One hypothesis is the outright sale of Electrabel to Enel, though Enel concedes this is unlikely. Another possibility is for Enel to form an Electrabel partnership with Suez, with each company holding a 40 percent stake in the group.
A third possibility is the acquisition of Belgian gas distribution group Distrigaz or other Electrabel assets if the Suez/GDF deal goes through, said the report in Les Echos.
AFP 12 1226 GMT 06 06
Copyright ©2006 AFP. All Rights Reserved.
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