French utility groups 'to merge'

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French utility groups Gaz de France and Suez are believed to be on the brink of signing a long-delayed merger.

Hopes that the two companies would agree revised terms mounted on Sunday as executives held a series of joint meetings.

Widespread media speculation suggested the two would announce a 90bn euro ($123bn; £61bn) merger on Monday. Both companies declined to comment.

The two firms have been trying to join forces since the start of 2006.

The expected announcement follows a weekend of talks between Suez and the office of French President Nicolas Sarkozy, aimed at hammering out details of a new merger agreement.

Revised terms

Reports suggested that under the new merger plans, Suez would spin off its water assets, which are valued at almost 20bn euros.

Analysts added that as Suez has grown much faster than Gaz de France since the original merger of equals was announced last year, new terms were needed as the original terms would have left Suez investors short-changed.

The tie-up has won conditional approval from the European Union but has met with stiff opposition within France.

France's main opposition party and unions have attacked the deal saying it will limit choice, push up energy prices and cost jobs.

Meanwhile, unions have also claimed that the new deal would mean the effective privatisation of the merged firm.

According to the CGT union, Mr Sarkozy's office has indicated the French government would hold a share of between 34% and 40% in the new firm - significantly less than the 80% stake it currently holds in Gaz de France.

If the two firms do merge they will create one of the world's largest energy groups by market capitalisation, behind the Russian giant Gazprom and France's state-owned Electricite de France (EDF).