International Power shareholders back GDF deal

By Marie Maitre

PARIS (BestGrowthStock) – International Power (IPR.L: ) shareholders overwhelmingly approved a tie-up with French utility GDF Suez (GSZ.PA: ) on Thursday, to create the world’s largest gas and power producer.

The deal, announced in August after months of on and off talks, will open GDF Suez to new markets in Asia and Australia, and enhance the French group’s position in the Middle East, GDF Suez chief executive Gerard Mestrallet told journalists at a news conference.

“This is particularly important when we know that 80 percent of new power production capacity that will be built over the next 20 years will be in emerging countries,” Mestrallet said.

Mestrallet said GDF Suez would give a guidance for the enlarged group in March 2011. He confirmed the tie-up would generate annual synergies of 200 million euros.

More than 99 percent of shareholders present or represented voted in favor of a deal, under which GDF Suez will transfer some of its assets into International Power in return for 70 percent of the ownership of the enlarged group.

The new group will have combined annual sales of 84 billion euros ($111 billion) and a market capitalization totaling more than 80 billion euros, making it the world’s biggest gas and electricity player, ahead of German group E.ON (EONGn.DE: ) and French utility EDF (EDF.PA: ).

“The vote showed a very strong support for the industrial logic of the combination,” International Power chief executive Philip Cox said via video link at the press conference in Paris.

Cox will keep his role in the new organization.

GDF Suez will continue to invest about 11 billion euros annually on industrial projects around the world, and aims at divesting assets worth 4 billion euros in the next two years.

“This is an effort to optimize our portfolio,” Mestrallet said. He said GDF Suez, created from the merger of Gaz de France and Suez in 2008, had divested 10 billion euros worth of assets over the past 2-1/2 years.

GDF Suez has declined to comment on the value of the deal, which analysts have found hard to assess because the value of the assets that the French group is transferring is not public.

Under the deal, International Power shareholders will receive a special dividend of 92 pence per share, totaling 1.4 billion pounds in exchange for relinquishing control of the company.

GDF Suez’s tie-up with International Power follows the 2008 sale of British Energy to French nuclear power group EDF, showing the appetite of French utilities for Britain as the country relaunches its nuclear power program.

Although International Power has no nuclear activities, Mestrallet said that taking control of the British company would bolster GDF Suez’s credentials in Britain.

“This deal will certainly not harm us… This deal gives GDF Suez greater visibility there,” he said, adding the French group would take a decision on whether to invest in nuclear projects in Britain in 2015 in order to be operational by 2023.

By 1425 GMT, GDF Suez stock was 0.2 percent higher at 27.54 euros in Paris, while International Power shares, which will remain listed on the London Stock Exchange after the deal, shed 0.1 percent at 423 pence.

The European utilities sector (.SX6P: ) was up 0.3 percent.

(Editing by Hans Peters and Jane Merriman)

($1 = 0.7559 euro)

International Power shareholders back GDF deal