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No timetable for French energy group merger: minister
By Anne Renaut
AFP
PARIS
Petroleumworld.com 06 28 07The French government could be about to unveil a mooted merger of state-owned Gaz de France and private utility group Suez, the newspaper Le Figaro said Wednesday in a report denied by the country's economy minister.
The government, which sees a tie-up with Suez as "the most pertinent" project for GDF, has asked both companies to present a merger proposal, the conservative newspaper added, without citing its sources.
"The marriage could become official in the coming days," the paper said.
But Economy Minister Christine Lagarde quickly stressed that no decision had yet been reached.
"All options are under study," she told reporters. "There is no timetable and no decision has been made."
A GDF spokesman declined to comment on the report, saying only that a decision on a long-awaited move by the energy group would come "in due time."
Suez also declined comment.
The news boosted the two companies' share price in early afternoon trade with GDF climbing 2.75 percent to 36.67 euros and Suez 1.02 percent to 41.72 percent euros on a market which was 0.59 percent lower.
Prime Minister Francois Fillon in late May said the idea of a GDF-Suez merger was "valid" but noted that other options also existed, including a GDF alliance with the Algerian gas group Sonatrach.
Fillon had given himself until "late June, early July" to examine the various possibilities.
Le Figaro's report came as European energy markets were to be opened Sunday to greater competition, although GDF's position in France appeared to be well defended.
Le Figaro's report came as European energy markets were to be opened Sunday to greater competition, although GDF's position in France appeared to be well defended.
Suez might be obliged to spin off all or part of certain activities, such as its water and waste treatment units to balance out the groups' respective sizes and allow for a merger with rather than a takeover of the state-owned GDF, the report said.
But as Suez is reportedly reluctant to get rid of its Suez Environnement division, other divestments were also under consideration in an effort to "slim down" the private utility, Le Figaro added.
The 5.0-euro difference in share prices worked against a suggested offer of one GDF share for each of those in Suez, even if an exceptional dividend of 1.0 euro per share was thrown in.
According to analysts at the Raymond James brokerage, Suez might offer investors a special dividend of 3.0 euros per share while selling off assets worth less than the environment division.
The long-discussed plan to merge GDF with Suez was designed to create a French national champion able to compete in a consolidating European energy market and protect both companies from foreign predators.But the controversial deal ran into legal trouble that squeezed its calendar against campaigning for French presidential and legislative elections and caused key private investors to question whether it could happen after all.
The French Constitutional Council, which rules on the legality of government legislation, said in late November that a merger of GDF with another company could only become operational after July 1, when EU consumers are to be allowed to choose their own energy suppliers.
The Suez-GDF plan was initially seen as a pre-emptive defence against a possible hostile bid by Italian energy group Enel. Many analysts believe predators are following efforts to rescue the merger closely with a view to bidding for Suez if the deal with GDF falls through.
AFP 271217 GMT 06 07
Copyright© 2007 AFP. All Rights Reserved.
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