Power firms revive talks over tie-up

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.

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.

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 1.16 billion, an increase of 10% on a year earlier after strong contributions from operations in Australia and Asia.

The company's Europe division, which includes its UK operations, saw profits improved to 629 million from 581 million 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