Takeover of International Power by French giant 'set to be agreed'

International Power, which owns a gas-fired plant in Saltend near Hull, is close to recommending a deal less than a month after fresh talks between the pair were confirmed.

The proposed tie-up comes after British Energy was bought by another French company, EDF, for 12.5bn in 2008.

GDF Suez, which is 36 per cent owned by the French state, is reportedly offering a special dividend worth up to 1.3bn to sweeten the deal for International Power shareholders.

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

It owns the giant coal-fired station at Rugeley in Staffordshire, which powers the equivalent of half a million homes.

It is also the majority owner of the First Hydro hydroelectric plants at Dinorwig and Ffestiniog in North Wales.

GDF Suez, which has more than 200,000 staff worldwide, is one of the world's biggest energy companies.

It is expected to own around two-thirds of the new company following the merger, which could be confirmed as early as tomorrow.

Talks between the two businesses took place in January, but foundered over the lack of cash on offer for International's shareholders. This issue is now said to be resolved.

It is understood that International Power's chief executive, Philip Cox, would stay in his role at the enlarged group, which would be chaired by GDF Suez's international vice-president Dirk Beeuwsaert.

International Power declined to comment.