Unions win delay of Suez-GDF merger: Appeals court blocks crucial board meeting Opposition mounts on all fronts as elections loom
David Gow - The Guardian
It was a marriage made by politicians in the Elysee and Matignon palaces, the summation of French "economic patriotism". But exactly 10 months later the euros 80bn merger between energy groups Suez and Gaz de France is on the rocks.
Last week an appeals court derailed plans to win shareholder approval before Christmas by forcing the indefinite postponement of a GDF board meeting to settle the final terms. The court ruled that unions had not been given adequate information on the merger's social impact.
On Wednesday the constitutional court could give the last rites by overturning a recent law enshrining GDF's privatisation by reducing the state's holding from 80% to 34%. That is considered unlikely but a host of politicians, both within the ruling presidential party, the UMP, and the socialist opposition are so hostile to privatisation they will exploit any further delay to try and scupper the merger.
The unions, which met Jean-Francois Cirelli, GDF chief executive, on Friday, can prolong the agony by demanding more and more documents, translated into several languages, and threatening to go back to court if dissatisfied.
Their hand has been strengthened because it was, of all things, a state-owned enterprise that failed to consult them properly. That apparent dereliction has left Mr Cirelli exposed. He is being made a scapegoat by ministers and UMP politi cians in favour of the deal. They are pressing for a firm timetable for the merger, with the hapless Mr Cirelli making vague promises about mid-February.
It is considered more likely that the timetable will slip further - right into the middle of the French election campaign. Both groups will now have to present their full-year 2006 results to shareholders before the deal can go ahead and sources say even February is a tight deadline.
Both front-runners to succeed Jacques Chirac as president in April-May - the UMP's Nicholas Sarkozy on the right and the socialist Segolene Royal - oppose GDF's privatisation. Ms Royal says she would renationalise the group and Mr Sarkozy originally wanted to keep 70% in state hands. Some of his supporters are now prepared to torpedo the merger .
Suez shareholders, marshalled by Belgian entrepreneur Albert Frere, who owns 8%, object to the proposed euros 1 special dividend to be paid on top of a one-for-one share swap with GDF. They want between euros 3.50 and euros 8. A less favourable offer was due to be endorsed at last week's abortive GDF board meeting.
Gerard Mestrallet, the Suez chief executive due to head the combined group, has said: "The ball is in GDF's court; we await its proposals." Late last week he said the merger remained Suez's strategic priority but his group was open to cooperation with other firms - including Enel, the Italian would-be suitor whose approach was spurned by the French political elite.
Share of GDF to remain in French government hands under a law that the constitutional court will decide on this week