Boards O.K. Giant Suez-GDF Merger

The boards of directors of French energy companies Suez and Gaz de France (GDF) have approved a merger plan giving birth to a national energy giant of which the French state would own more than 34 %.

The Secretary General of the Elysee Palace Claude Gueant has welcomed the move saying it would create the second or third biggest energy company in Europe with a market capitalisation of about €80 billion.

Technically, GDF-Suez is a privatisation of the public owned GDF, but the French state will remain the main stock holder of the new company owning more than 34% of it, French media report.

Initially the plan had met opposition from within France precisely because it meant privatising Gaz de France.

Under the modified plan approved on Sunday evening (2 September), Suez is also agreeing to give up on its environmental arm, Suez Environnement, with Mr Gueant saying that the state is not meant "directly or indirectly to become a stock holder of an environment firm. Energy is what is strategic".

The EU okayed the merger last November on certain conditions, one of them being that the companies agree to sell some of their units in order not to impede competition.

The two groups' directors wrote to the European Commission last week asking for a new extension of the deadline for meeting those conditions, set by Brussels for 30 September.