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Sarkozy makes proposal to unblock stalled Suez-GDF merger
AFP
PARIS
Petroleumworld.com 08 30 07
French President Nicolas Sarkozy said Thursday that he wanted French energy group Suez to "make a strategic choice and specialise in energy" so it can proceed with its proposed merger with Gaz de France.
The statement suggested the French state wanted Suez to sell its "environment" division, which includes water and other non-energy operations -- something that Suez has consistently ruled out.
Sarkozy said he had proposed to Suez that it should "merge its energy activities with GDF and form a large gas and electricity group ... in which the state would be the shareholder."
"That assumes that Suez makes a strategic choice to specialise in energy. It's up to its shareholders now to decide about this," he said.
Suez, which reported first-half results on Thursday, underlined earlier the "relevance" of its strategy of "simultaneous and sustainable development of its activities in energy and the environment."
Chief executive Gerard Mestrallet said at a press conference: "We are prepared for both hypotheses -- carrying out this project (of a merger with GDF) but also the hypothesis of continuing our dynamic standalone strategy."
The merger of Suez and GDF has been held up for almost 18 months because of legal obstacles, opposition from labour unions and elections earlier this year in France.
The latest problem is a difference in valuation of the companies, which would mean a merger on the initial terms agreed by the companies would leave Suez shareholders short-changed.
Suez shares have risen in value since the companies agreed to a one-for-one share swap deal with an additional payment by GDF of one euro per Suez share.
Shares in Suez gained 5.06 percent to close at 40.90 euros, while shares in GDF added 2.05 percent to 34.79 euros.
For its first-half results, Suez said its first operating profit had increased by 10.4 percent to 4.1 billion euros (5.6 billion dollars).
The company also reaffirmed its main targets for the full year of a rise of more than 15 percent in profit from continuing business and more than 10 percent in gross operating profit.
Net profit amounted to 1.9 billion euros, exceeding market expectations.
burs-adp/shn
AFP 30 1904 GMT 08 07
Copyright© 2007 AFP. All rights reserved.
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