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New threats to GDF-Suez merger revealed
AFP
PARIS
Petroleumworld.com 10 13 06
A planned merger of French gas utility GDF and private energy group Suez faced fresh complications Thursday following a report that French tycoon Francois Pinault and Italian group Enel had prepared a multi-billion-euro offer that would derail the deal.
A report in the newspaper Les Echos that Pinault was ready to pay 18 billion euros (22.6 billion dollars) for Suez's water and waste management jolted parliament here.
Communist and Socialist deputies demanded that legislation allowing for the privatization of GDF, which is necessary for the merger take place, be withdrawn or its consideration by parliament suspended.
Les Echos said Pinault had joined forces with Enel, which is interested in energy assets owned by Suez but has been blocked by the French government. French authorities stepped in last February to thwart an potential Enel move with a plan for Suez to absorb Gaz de France (GDF).
According to Les Echos, Pinault would buy environmental service units owned by Suez while Enel would split off the French group's energy activities, notably Belgian electricity company Electrabel.
"Suez environment is not for sale," a spokesman told AFP when questioned on the Les Echos report.
In Italy, an Enel spokesman said the company was no longer considering a joint assault with Pinault.
The newspaper said the move by Pinault, who is close to President Jacques Chirac, could disrupt French efforts to merge Suez and GDF. Legislation opening the way for the effective privatisation of GDF by Suez has passed through the National Assembly and now awaits approval by the Senate and Chirac.
News that Pinault may be in the market for part of Suez came as directors at GDF held an emergency meeting to consider new conditions for the merger imposed by European Union competition authorities.
The European Commission is seeking more concessions from the groups in exchange for its endorsement of the merger, a source close to the matter said Wednesday.
The Commission has already warned the companies it will not approve the deal unless business divestments and other measures were taken to ensure they would not have a dominant position in Belgium and France.
Both companies sent the Commission a number of proposals on September 20, including the sale of GDF's 25.5 percent stake in Belgian electricity group SPE.
The EU panel had been due to make its final ruling on the merger by November 17 but decided on Thursday to extend its decision date to November 24, giving no reasons for the move.
While a source close to GDF has said the group maintains it has done enough to satisfy the Commission, analysts said it was unlikely that it will abandon the merger with Suez given that the government -- still the majority shareholder -- strongly backs the tie-up.
AFP 12 1646 GMT 10 06
Copyright ©2006 AFP. All Rights Reserved.
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