Centrica bids for Belgium assets as GdF-Suez seal €70bn merger

Click to follow

Centrica said yesterday it would seek to buy Gaz de France's 25.56 per cent stake in Belgium's SPE, giving it control of that country's second biggest power business.

Centrica said a condition demanded by Brussels for Gaz de France to push through its planned €70bn (£47bn) merger with the Franco-Belgian utility Suez was that Gaz de France sell its stake in the Belgian business.

The company said: "Our plan is to build a business of significant scale in the Belgian market and compete vigorously so this would give us a good platform to grow that business further, working in partnership with the other municipal shareholders."

SPE boasts 1.4 million residential and business customers, giving it about 15 per cent of the market and putting it in second place behind Electrabel, which is owned by Suez. Centrica has been seeking to expand its European operations and said the business would work well alongside its Dutch operations where the company has around 600,000 customers. In addition to its supply business, SPE produces electricity at 19 plants in Belgium. Centrica paid £131m for its stake when it set up the joint venture with Gaz in 2005.

Yesterday Gaz de France chief executive Jean-Francois Cirelli said he did not "see what could stop this [the Suez merger] project today" and would meet the EU authorities soon.

The deal, billed as a merger of equals, amounts to the de facto privatisation of the state-controlled Gaz de France, although the French government will retain a 35 per cent stake in the merged business, which will give it a blocking minority. Suez's chief executive Gerard Mestrallet, who will run the merged company, defended the French state's presence in the group, saying it would provide greater visibility.

The French president, Nicolas Sarkozy, has backed the deal, but unions are opposed. But Mr Cirelli said he did not envisage compulsory lay-offs, arguing that the merger would create jobs.

Gaz de France signed a deal last week to develop salt caverns in north-west England into a huge underground storage centre for gas, as the UK seeks to secure supplies with the decline in production from the North Sea.

Centrica, through British Gas, is the largest energy supplier in the UK. Yesterday the company also said its Norwegian subsidiary Centrica Energi had joined four other gas operators to start a gas drilling rig as part of its exploration programme.

The company has six exploration licences in Norway, two in Nigeria, one in Trinidad, one in Egypt and two in British waters.