Europe’s second-biggest utility company, GDF Suez, is set to take control of its smaller British rival International Power.
The two restarted talks in July after efforts to merge earlier this year had failed.
The deal will create the world’s largest independent power producer in terms of revenue.
It gives GDF a greater presence in the United States, the Middle East and Asia, as well as access to the UK and Australia.
The tie-up was announced on the day that both firms reported forecast-beating first-half results.
Last year revenue at the Franco-Belgian electricity and natural gas firm was 80 billion euros while the British company’s was 2.7 billion.
GDF Suez, which is 36 percent owned by the French government is worth 60 billion euros, while International Power’s market value is seven billion.
This deal means only two of the ‘Big Six’ household power suppliers in the UK are still controlled by domestic firms.
Analysts said it is another indication that European energy markets are becoming increasingly integrated, a trend that is likely to continue.