GDF Suez SA and International Power Plc are near an agreement that would have France’s second- largest utility take control of the British company with interests in more than 45 power stations, according to two people with knowledge of the matter.
GDF Suez will pay International Power shareholders a special dividend of about 1.3 billion pounds ($2.1 billion) as part of the deal, and GDF will control about two thirds of the enlarged company, said one of the people, who declined to be identified as the talks are private. While the companies are trying to reach a deal before both report earnings tomorrow, there’s a chance an agreement won’t be reached, the people said.
The transaction under discussion would join International Power with Paris-based GDF’s units outside Europe with assets in the U.K. and Turkey, the companies said July 19. The proposed agreement would make GDF the majority shareholder in the expended company, being structured as a reverse takeover under U.K. takeover rules, according to the statement.
International Power, based in London, has a market value of 5.6 billion pounds. GDF has a market value of 59.2 billion euros ($78.7 billion.)
The discussions come after talks between the two companies on a similar transaction broke down in January. Antoine Lenoir, a GDF Suez spokesman in Paris, and International Power’s London- based spokeswoman Sally Hogan both declined to comment.
GDF’s bid may be worth more than 400 pence a share and include a cash payment, UBS said last month. The deal would make “strategic sense” and lead to financial and operating cost savings of 80 million pounds a year, UBS said.
Power Plants, Wind Farms
International Power rose 0.1 percent to 366 pence in London trading on Aug. 6.
International Power has interests ranging from wind farms in Canada to gas-fired plants in the United Arab Emirates and Thailand. GDF Suez is seeking to grow abroad and expand in electricity generation.
GDF Suez Energy International has about 32 gigawatts in operation including in Brazil, Thailand and the U.S. The utility’s U.K. units include Europe’s largest combined-cycle gas turbine electricity plant. The company is one of Turkey’s largest natural gas distributors.
The likelihood of a deal being announced tomorrow was previously reported by the Sunday Times.