GDF-Suez merger snubs Italy's Enel

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GDF-Suez merger snubs Italy's Enel

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Suez and Gaz de France are to merge to create the world’s second-largest power and gas company.

The move is also designed to block a hostile bid for Suez from Italy’s Enel.

The government-brokered merger of equals will create a company that had a turnover of close to 49 billion euros in 2004 from energy, water and waste management, with a market value of 72.8 billion euros and nearly 200,000 employees.

The French Finance Minister Thierry Breton said that his government will retain a 34% stake in the new company.

It currently owns just under 80% of Gaz de France and is reneging on a promise made last year when it sold 20% of GDF to private investors. At that time, to placate the unions, it said it would keep control of the company.

Trade union leader Jean-Claude Pélofy was unhappy as he emerged from a meeting with Breton.

He said: “The announcement came as a bombshell, although we’ve known for months, even years, that it was likely the two groups would be merged, we don’t feel the way it was done was appropriate and it was not appropriate for the workers in this sector.”

The hastily arranged marriage came just days after Italy’s largest power company, Enel, expressed an interest in Suez and particularly its Belgian unit, Electrabel.

Enel declined to comment on the announcement of the planned merger, but the Italian government denounced it.