International back in talks with French rival over link-up

International Power – the owner of UK assets including the giant coal-fired station at Rugeley in Staffordshire – is back in talks over a potential tie-up with GDF Suez of France, it was confirmed yesterday.
By The Newsroom
Published 20th Jul 2010, 12:21 BST
Updated 20th Jul 2010, 12:21 BST

The pair said the proposed new entity, combining International Power and the international assets of GDF, would continue to be listed on the London Stock Exchange with GDF as its majority shareholder.

Discussions between the two sides collapsed in January after they were unable to agree terms and the UK company's biggest investors reportedly demanded a greater element of cash in any deal.

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It is thought that International could pay a special dividend to shareholders on this occasion as part of the deal to merge with GDF's overseas assets. Shares opened around 10 per cent higher yesterday.

International Power is one of the largest independent generators in the world with interests in over 45 power stations in 21 countries.

As well as Rugeley, which powers the equivalent of half a million homes, it is the majority owner of the First Hydro hydroelectric plants at Dinorwig and Ffestiniog in North Wales and the gas-fired station at Saltend, near Hull.

The company reported full-year profits of 1.16bn, an increase of 10 per cent on a year earlier after strong contributions from operations in Australia and Asia.

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The company's Europe division, which includes its UK operations, saw profits improve to 629m from 581m a year earlier.

GDF is 35 per cent owned by the French government and is one of the world's largest utilities with a value several times larger than International Power's current market capitalisation of just under 5bn.

The two companies are seen as being a good geographic fit as GDF has few assets in the UK but is much bigger than International Power in areas such as North America and the Middle East.

International said areas for discussion with GDF included the amount of debt due to be contributed into the new entity.

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It added: "If the combination were to be completed, it is expected that shares in International Power would be issued to GDF Suez and that, as a result, GDF Suez would be the majority share- holder in the enlarged International Power."

Related topics:France