International Power shareholders are set for a £1.4bn windfall as a sweetener for the merger deal with French utility giant GDF Suez.
The reverse takeover formally announced yesterday will see the French company merge its GDF Suez International business with International Power, in return for a 70 per cent stake in the combined group.
The remaining 30 per cent of the new company will stay with International Power's existing investors, who will receive a 92p-per-share special dividend on top of their 4.39p interim payment.
If shareholders agree the deal, the new company – which will be called New International Power – will be the world's largest independent power producer, with estimated sales of £11.2bn. It will retain both its listing on the London Stock Exchange and its existing chief executive and chief financial officer, in Philip Cox and Mark Williamson respectively.
Dirk Beeuwsaert, who is currently an executive vice-president at GDF Suez, will be the chairman. Sir Neville Simms, the current International Power chairman, will be his deputy.
New International Power stands to see annual cost savings of £165m at International Power and €70m (£58m) at GDF Suez, the two companies said yesterday. It will also have a "robust capital structure" with access to "significant" additional capital from GDF Suez at an attractive cost, Sir Neville said yesterday.
"This is a strong combination of two world-class businesses that have a highly complementary geographic footprint," he said. "The combined company will benefit from significant synergies, a strong pipeline of committed new build and broader access to high-growth markets."
International Power has 45 power stations worldwide, only six of them in Britain. But the deal may still raise eyebrows in the UK. It leaves only two independent companies in the power sector – Centrica and Scottish & Southern Energy – and follows the sale of British Energy to France's EDF Energy in 2008 for £12.5bn.
The possibility of a merger between International Power and GDF Suez was first raised last year, but talks foundered in January because the French group refused to put up any cash. Negotiations were then revived last month, and the final deal was announced yesterday alongside first-half results from both companies.
GDF, which is 35 per cent-owned by the French state, reported profits up by 9 per cent. But International Power saw a 5 per cent drop.
Investors reacted warily to the deal. International Power shares closed down 1.95 per cent at 372.6p. GDF Suez stock was off 1.57 per cent at €26.37.Reuse content