GDF Suez takes over Britain's International Power

PARIS: French utility giant GDF Suez will take over its British competitor International Power, the groups said on Tuesday, creating what they called the world's top independent power company.

France's Prime Minister Francois Fillon hailed the "forming of a world leader in electricity production" while analysts said it would also boost the British energy market.

GDF Suez will pay 92 pence per share to International Power stakeholders for a total price of 1.4 bn pounds (1.68 bn euros, 2.2 bn dollars), the firms said in a joint statement.

The move will transfer some of GDF Suez's international assets to the British firm to form a company called New International Power, listed on the London stock exchange, they said.

"We are becoming the leading world energy company among (non-oil) companies and in electricity production we move from eighth to second place in the world," GDF Suez's chief executive Gerard Mestrallet told media.

The French giant was formed in 2008 by the fusion of public enterprise Gaz de France and Suez, a private Franco-Belgian company. It specialises in processing liquefied natural gas and energy production.

The company said the tie-up would give it total electricity capacity of 107 Gigawatts, the second highest worldwide -- behind another French utility, EDF, with 136.3 Gigawatts and ahead of China Datang with 100 Gigawatts.

Fillon said in a statement that the French state would retain its 36-percent stake in the company.

"This major industrial operation shows the vitality and dynamism of big French industrial businesses in a particularly strategic sector," he said.

Top British energy analyst firm Inenco said "the multi-billion pound merger will give International Power access to funds to support longer-term investment in the UK, helping to bridge the UK's fast-approaching energy generating gap."

International Power runs 45 power plants worldwide. It said it had revenues worth some 4.2 bn euros in 2009, compared with nearly 80 bn euros for GDF Suez.

The announcement came as GDF Suez reported its first-half results: a net profit of 3.6 bn euros, up 9.3 percent on a year earlier, due mainly to a particularly cold winter, the company said in a statement.

The deal gives the new company "strong market positions in Latin America, North America, UK-Europe, the Middle East, Asia, and Australia," Mestrallet said in the statement.

International Power's chairman Neville Sims added: "The combined company will benefit from significant synergies, a strong pipeline" of new projects and "broader access to high growth markets for further expansion."

With energy markets saturated in Europe and North America, the companies cited emerging economies such as Latin America, Asia and the Middle East as the big growth opportunities.

The companies forecast the tie-up would make them savings worth 197 mn euros a year and yield combined turnover of 86 bn euros.

Mestrallet told a news conference in London that GDF Suez would also sell off four or five billion euros' worth of its assets over two years to firm up its balance sheet.

The deal followed months of negotiations after a bid by the French company at the start of the year fell through. The companies expect it to be sealed by early 2011 after International Power recommended shareholders approve it.

"The deal should be seen as another indication that European energy markets are becoming increasingly integrated," said Inenco analyst Rebecca Seabury in a statement.

"This is a trend that is likely to continue," she added. "We could be looking at a fully integrated European market in the next 15-20 years."