GDF to snap up International Power for £6bn

GDF Suez yesterday agreed to pay £6.4bn to take full control of International Power.

GDF already owns 70 per cent of the company but has been pursuing the remaining 30 per cent.

The 418p per share offer, at a seven per cent premium to an earlier approach by GDF, values International Power at about £22.3bn.

French giant GDF believes the move will give it more clout across the globe, considering the British company’s worldwide operations.

“GDF has made an attractive proposal and the independent IPR directors have concluded that it represents a price that fairly reflects the company’s position in international power generation markets and its inherent growth potential,” Sir Neville Simms, senior independent director of IPR, said.

GDF completed its acquisition of 70 per cent of IPR in February 2011, creating the world’s largest independent power producer.

In order to finance the deal for the remaining slice of the company GDF said it would tap banks and sell an additional €3bn (£1.8bn) worth of assets located primarily in mature markets, on top of €10bn in assets it had originally planned to sell by 2013. It has also already completed two thirds of its earlier asset disposal plan.

The company reckons it will retain its triple-A credit rating despite the costs attached to the deal.

GDF Suez estimated that increased profit contributions from the takeover of IPR would lift its earnings by as much nine per cent to €4.2bn.

Greater competition and regulation in mature energy markets in Europe have steered GDF Suez’s focus to developing markets where energy needs are growing fast.

GDF chief executive and chairman Gérard Mestrallet said the deal, agreed yesterday and due for completion in July, “establishes a basis for long term and solid growth”.