France’s Suez SA and Gaz de France said Monday that their boards have approved an all share, one-for-one merger in a deal that will create one of the world’s largest utilities, worth more than $83.27 billion.
In a joint statement, Suez said that it will pay its shareholders an extraordinary dividend of $1.19 per share, worth $1.49 billion, and then offer one Suez share for each GDF share. The merger plan would block a potential hostile bid from Italy’s Enel SpA for Suez.
Although the two French energy giants said they had been discussing a deal for months, they accelerated their talks last week after Enel said it was considering buying Suez. The French government, which owns 80 percent of GDF, then gave its blessing Saturday to a Suez-GDF merger, saying it was the best way to secure energy for France.
French Economy Minister Thierry Breton was to meet Monday with union representatives, the first round of what is likely to be a series of consultations. Suez Chairman Gerard Mestrallet and Gaz de France CEO Jean-Francois Cirelli were to be present, a ministry spokesman said.
The companies said the offer represents a 3.9 percent premium to the average GDF share price over the three months to Feb. 24. The merger will generate $594.8 million in annual savings, they said.
The combined group will generate about $76.13 billion in annual revenue from electricity, gas and water operations, based mostly in France and Belgium.
Suez and Gaz de France said they have not yet determined the governance structure of the new group. They said the deal will not lead to any job losses, and that the legal statutes for each of the company’s employees will not change.
The companies said they expect the deal to be complete by the end of the year.
The deal comes as France is propelling its idea of “economic patriotism” in the face of growing globalization. It also comes as a spate of hostile takeover bids across the continent threatens French control of some of the country’s largest corporations.
In a statement Sunday, GDF and Suez said their deal would create “a European champion with a global size in energy and environment.”
Breton pledged Monday that the state “would not cede one share” in the deal, and that the government’s share of the new company would be between 34 percent and 35 percent.