France launches new GDF-Suez utility merger plan

By Marie Maitre

PARIS, Sept 3 (Reuters) - France prepared on Monday to announce a giant energy merger between Suez and state-controlled Gaz de France after President Nicolas Sarkozy stepped in to prevent the deal collapsing, risking a clash with unions.

The boards of both companies met late on Sunday and at least one of them backed the deal, hammered out in government offices over the weekend, after Sarkozy put pressure on Suez to abandon the majority of its water and waste assets and focus on energy.

The companies have a combined value of 90 billion euros ($123 billion) before any spin-off of Suez environmental assets.

A source close to the GDF board said the state-controlled firm had adopted the deal, which includes its own privatisation, a measure strongly opposed by unions and opposition Socialists.

The outcome of a Suez board meeting earlier on Sunday was less clear, but the GDF vote implied a green light from Suez.

A press release was scheduled for 0600 GMT with a news conference later on Monday, at a time to be confirmed.

The deal is a new version of a plan announced by former Prime Minister Dominique de Villepin in early 2006 to prevent a foreign takeover of Suez, while beefing up GDF's power assets.

Sarkozy, elected in May on a programme of economic reforms and an advocate of a hands-on industrial policy, held meetings on Saturday to smooth a deal but failed to impress unions who accused him of abandoning earlier pledges to keep GDF public.