FRENCH UTILITY GDF Suez took full control of Britain’s International Power yesterday through a sweetened offer of £6.4 billion, leaving the world’s biggest independent power producer better placed to win contracts in fast-growing emerging markets.
The deal comes a few weeks after International Power turned down an earlier offer GDF Suez had made to buy out the remaining 30 per cent of the company it did not already own, saying it was too low.
In order to finance the deal, GDF said it would tap bank lenders and sell an additional €3 billion worth of assets located primarily in mature markets, on top of €10 billion in assets it had originally planned to sell by 2013.
Banking sources said GDF was raising a new €6 billion syndicated loan facility, arranged by the company itself, from its relationship lenders. The company declined to comment.
GDF Suez conducted the acquisition in two stages, keen to prevent its debt from increasing too significantly and to preserve its A credit rating. It has completed two-thirds of its earlier asset disposal plan.
It estimated that increased profit contributions from the takeover would lift its earnings by as much as 9 per cent to €4.2 billion.
Greater competition and regulation in mature energy markets in Europe, bogged down by the economic crisis, have steered GDF Suez’s focus to developing markets where energy needs are growing fast.
The International Energy Agency forecasts overall energy demand to grow by 40 per cent between 2009-2035, the bulk of which is seen outside industrialised nations. The purchase of IPR will boost GDF Suez’s presence in regions where energy demand is growing, such as South America, the Middle East, South-East Asia and Australia, and buying out the remaining stake will simplify the group’s structure.
The International Power acquisition in 2010 added 35 gigawatts in electricity production capacity worldwide, or the equivalent of 35 small nuclear reactors, to a total of 117 GW today at GDF Suez.
The 418 pence per share offer, at a 7 per cent premium to an earlier approach by GDF, values International Power at about £21.3 billion. – (Bloomberg)
