GDF Suez and International Power poised to announce merger plans

City A.M. Reporter
FRENCH utility GDF Suez and British peer International Power could announce plans to merge as early as tomorrow.

The two companies are both due to report first-half results tomorrow but the figures will likely be overshadowed by any update on the progress of tie-up talks.

The two said last month they were working on a deal that would see GDF take a majority stake in International Power after transferring some of GDF’s non-European assets into the British company.

International Power’s directors are set to meet today, to discuss whether or not to recommend a deal that would include a special dividend of £1.2bn to £1.3bn for the company’s shareholders.

The lack of cash on offer for International Power’s shareholders was the main stumbling block when a tie-up was first discussed back in January.

GDF, which is 36 per cent owned by the French government, is one of the biggest energy companies in the world, with over 200,000 staff. It is expected to own around two-thirds of the new company following the merger. The remainder of the shares will still be listed in London.

International Power chief executive Philip Cox is expected to keep the top job at the enlarged firm, which will likely be chaired by Dirk Beeuwsaert, GDF’s international vice president.

The merged firm would have an investment grade rating, allowing it to borrow more cheaply and ramp up plans to roll out more power stations.

A spokesman for GDF said it had no comment beyond the official statement when the talks were announced in July. International Power declined to comment.