GDF Suez initiated a bid for International Power

GDF Suez, the fifth biggest power producer in Europe, has made a takeover proposal for the FTSE 100-listed International Power, a move which will likely elevate political anxiety over the sale of the vital British energy infrastructure.

GDF Suez is 35 per cent partly owned by the French government. It has an estimated market value of above £55 billion, under sizing International Power which only has half a dozen power plants across the UK and with a market value just under £5 billion.

Meanwhile, International Power, drawn out by energy firm npower 10 years ago, has operations in the US, Asia, Europe and the Middle East. In the UK, the company owns power stations located at Derby, Deeside in northern Wales, St Austell in Cornwall, Rugeley in Staffordshire and Saltend close to Hull. The energy firm also has experience in renewable energy through a joint partnership with Japan’s Mitsui.

Both companies are rumoured to have been in negotiations since December of last year. Last week, the French government’s state shareholdings department gave its thumbs up for project bidding. GDF Suez, which operates in Latin America, Middle East and Asia, has prearranged the banks Rothschild, Goldman Sachs and BNP Paribas to hammer out the details of the bid.

Lord Mandelson, serving as the UK’s business secretary, however warned that foreign ownerships of British energy companies could be a drawback to the UK in the long run. Centrica and SSE are currently the two remaining energy suppliers in the UK that are still under British ownership.

Companies like Thames Water is now owned by the Australian bank Macquarie, nuclear power firm British Energy is presently part of the French group EDF, airport operator BAA is currently held by the Spanish infrastructure group Ferrovial and Scottish Power is now partly owned by Spain’s Iberdrola.