GDF-Suez merger to create major Europe LNG force

GDF-Suez would be the leading gas buyer and seller in Europe and a global leader in liquefied natural gas (LNG), said Gaz de France.

In addition, it will be the number five and number two European and French power producer respectively with strong positions in the US, Brazil and the Middle East, the number one gas transmission and distribution network operator in Europe and number two storage and LNG terminal operator in Europe.

The deal was made possible when Suez chairman and CEO Gerard Mestrallet was persuaded by France's President Nicolas Sarkozy to spin off the environmental division, over which it will retain control through a shareholders' pact.

It concludes an 18-month-long political, financial, constitutional and parliamentary saga sparked in February 2006 when the then French Prime Minister Dominique de Villepin wanted to save Suez from being taken over by Italy's Enel.

Paris will keep more than 35% of the new Franco-Belgian group, which will have a combined stock market capitalization of €90bn ($123bn) and revenues of €72bn. Mestrallet will run the utilities group jointly as chairman and CEO with GdF's Jean-Francois Cirellias as vice-chairman and president.

The merger should become operational some time in 2008. Its biggest hurdle will be France's trade unions, especially the powerful CGT electricity and gas union, which was strongly opposed to the partial privatisation of Gaz de France which the merger required.

($1 = €0.73)

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