FRANCE: Protesters rally against a proposed utility merger between state-controlled GDF and Suez

Record ID: 773195

  • Title: FRANCE: Protesters rally against a proposed utility merger between state-controlled GDF and Suez
  • Date: 15th October 2006
  • Summary: (SOUNDBITE) (French) MARIE- GEORGE- BUFFET, PRESIDENT OF THE FRENCH COMMUNIST PARTY SAYING: "We are proposing to merge EDF and GDF so they would stay in the hands of everybody. I think that today the energy can not be abandoned to the market."
  • Embargoed: 30th October 2006 12:00
  • Keywords:
  • Location: France
  • Country: France
  • Topics: Domestic Politics
  • Reuters ID: LVAC3EY634E5OPOM3WXKRCC48VPI
  • Story Text: About 3000 protesters marched through Paris on Saturday (October 14) to rally against a proposed utility merger between state-controlled Gaz de France and private company Suez.
    Unions are afraid that the merger would lead to thousands of job cuts and want GDF to be merged with state-owned power group Electricite de France. Bernard Thibault, president of the union CGT, said in the today's demonstration,
    "Look just an example: We have been told that the privatisation of GDF (Gaz de France) would give it enough weight to merge with Suez then they would be able to be competitive in the world market. And look, today with the concessions that Brussels is asking nothing will change on the area of competence. So all the arguments which have been given fall one by one. And today we are here to show that we are against the privatisation of GDF."
    The merger was approved by the French lawmakers in the lower house of parliament on October 3, 2006.
    The bill, which was approved by 327 votes to 212 would allow the government to cut its stake in GDF to a third from the current 70 percent floor but leave it with a strategic "golden share" as a preliminary to a merger with Suez.
    The government believes the move, which would create Europe's second largest utility, is needed to build a private sector champion with the muscle to hold its own in world markets.
    However, the bill is yet to be approved by the Senate, which has already begun to examine it.
    The intended merger also faces a competition inquiry from the European Commission.
    Suez said on Friday (October 13) it would sell its 62 percent stake in Belgium's Distrigaz as part of fresh concessions to the European Union aimed at winning approval for its 72 billion euro merger with Gaz de France.
    The new combined group would however get a 70th in supplies stemming from long-term contracts held by Distrigaz to cover its gas requirements, power stations and Electrabel customers.
    Suez, which had previously insisted on keeping control of the distributor, backed down after pressure from the European Commission over the competition impact of its planned merger.
    Belgium also urged Suez to cut its stake.
    Gaz de France said in a joint release with Suez that it would sell its
    5 percent interest in Belgium's second-largest power producer SPE.
    Belgium is concerned about the all-French merger because of the effect it could have on competition in the Belgian market, where Suez is dominant after its acquisition of Belgian power group Electrabel and where GDF already has a strong presence.
    Suez and GDF had already offered concessions on the electricity market in Belgium and gas supplies to industrial customers, but EU officials pushed for further concessions.
    A Suez spokesman said the two companies would now cede a total of 13 percent of their combined gas production.
    Suez and GDF said they also would reinforce their interest in the Zeebrugge terminal to 61 percent from 50 percent.
    The concessions came as Suez won a reprieve from a possible counter-bid when French retail tycoon Francois Pinault announced he had dropped plans to try to buy Suez's environmental unit in partnership with another company like Italy's Enel.
    Enel, whose initial approach to Suez drove the French company into the arms of GDF earlier this year, said on Thursday (October 12) it had considered partnering Pinault but had dropped the idea.
    Suez Chairman and Chief Executive Gerard Mestrallet said he saw no threat to the planned merger with GDF despite some political opposition and lingering talk of a possible counterbid.
    He also told French radio station BFM he was confident the company could find suitable remedies to gain clearance for the deal from the European Commission.
    Asked about possible changes to the terms of the merger, Mestrallet replied: "There is a time for everything."
    Suez shareholders have expressed disquiet about the merger, with Suez shares discounting an improvement in a special cash dividend to be paid to Suez shareholders.
    GDF, however, has been reported to be growing frustrated with the scale of concessions being offered by its partner to seal the merger since it had its eye on the Belgian assets.
    Mestrallet said the industrial logic of the merger plan would be respected in any deal with the European Commission.
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2011. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register