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After two years of talks, shareholders in France’s state-owned Gaz de France (GDF) and the private French power firm Suez have agreed to merge the two companies, forming a single energy titan worth approximately $148-160 billion in the stock market. On July 22 GDF-Suez — one of Europe’s top three biggest gas and electrical companies along with France’s EDF and Germany’s E.ON — will make its debut in stock markets in Paris and Brussels.
The GDF-Suez merger marks a huge success for those who wish to continue the European tradition of managing energy nationally through large monopolies with considerable state backing, given that the French government will retain a 35.6 percent stake in the merged entity. It also amounts to a major setback for the European Commission in its ongoing liberalizing efforts to break up vertically integrated firms, encourage competition and diversify Europe’s energy sources.
The GDF-Suez merger comes after two years of frenzied bids and counterbids, legal complications, antitrust probes, and general deal-making and deal-breaking by several powerful European players. In February 2006 Italy’s Enel made a bid to take over Suez, while days later GDF and Suez announced their plans to merge. The idea met with harsh resistance from groups within Paris and Brussels, as well as among private concerns fearful of GDF’s and Suez’s combined might. In June 2006 an indignant Italy complained to Brussels, and Europe launched an antitrust probe.
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