GDF Suez looks set to take control of the UK’s International Power after the French firm sweetened the deal with a cash dividend for International Power shareholders.
The two companies have signed a memorandum of understanding detailing the deal, which would see GDF Suez Energy International’s assets transferred to International Power to create the world’s largest independent power producer.
If the deal goes ahead, GDF Suez will own a 70 per cent stake in the new company, which will be known as New International Power. The remaining 30 per cent of the new group will be owned by International Power shareholders, who will receive a 92 pence-per-share special dividend.
The industrial logic of the proposed deal is “compelling” due to the benefits for shareholders, customers and employees and the geographic and operational fit of the businesses, say the two companies. The deal is also in line with GDF Suez’s ambition to expand its electricity generating capacity outside France.
New International Power will operate over 66 GW of generating capacity around the world, with an additional 22 GW of committed projects in the pipeline. It will also have a “well balanced portfolio” of assets in terms of geographic presence, fuel mix and contract type.
Total synergies from the merger will amount to £165 million per year, say GDF Suez and International Power.
“This agreement, which combines these two businesses, creates the leading global energy player in IPP with strong market positions in Latin America, North America, UK-Europe, the Middle East, Asia and Australia,” said Gérard Mestrallet, Chairman and CEO of GDF SUEZ. “The combined business will have both the operational expertise and the financial flexibility to capture the significant growth opportunities in international energy infrastructure markets over the next decade.”
Mestrallet added: “As a result of this transaction, GDF SUEZ will achieve its strategic objective of 100 GW in operation and strengthen its worldwide leadership in power generation.”
GDF Suez is 35%owned by the French state. International Power owns around 5 GW of generating capacity in the UK and the deal may raise concerns there following the sale of nuclear power operator British Energy to French state-owned firm EDF in 2008.
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