Enel eyes Suez-deal leftovers

Italian energy giant Enel is waiting to turn a possible merger between Suez and Gaz de France to its advantage by snapping up assets relinquished to satisfy EU regulators.

An industry insider said that Enel is "closely monitoring the situation and [is] ready to grasp any opportunity that could arise as a result of the merger deal".

Brussels is widely expected to give the merger its seal of approval next month (24 November) following a final round of revised concessions from both companies.

Assets that are to be shed next year include Belgium’s second largest power company SPE, currently owned by Gaz de France, and almost a third of Suez’s Belgian power generation capacity.

The insider said that Enel would make an offer for the assets as the move would be in line with company strategy. Enel’s ten-year strategy for EU expansion was unveiled by Chief Executive Fulvio Conti earlier this year after it had been forced to suspend attempts to bid for Suez.

The €72 billion- merger between national champions Suez and Gaz de France, heavily managed by the French government, was launched following rumours that Enel might bid for Suez.

The European Commission expressed disapproval of the deal, reserving particular criticism for French Prime Minister Dominique de Villepin’s calls for ‘economic nationalism’.

But it has no reason to block the deal; antitrust regulators’ concerns about excessive market dominance of the merged entity in the Belgian market have been allayed by planned asset sales. Enel has not given up hope that Suez shareholders will block the deal at a planned extraordinary shareholders’ meeting in December. Institutional shareholders have expressed reservations about the present terms of the deal.

Suez spokesperson Guy Dellicour said that remaining concerns about the valuation of shares would be cleared up by the end of the year.

Should shareholders thwart the deal, a previous arrangement between Enel and French company Pinault, owner of luxury goods retailer PPR, could be revived.

Under the terms of the understanding, which Enel has now declared invalid, Pinault would have purchased the waste and water assets of Suez after it had been bought by Enel.

"Pinault wanted the environmental assets, which is exactly what we did not want," said the insider. Asked whether the arrangement might once again become relevant, he said: "I can’t rule it out."

Italian energy giant Enel is waiting to turn a possible merger between Suez and Gaz de France to its advantage by snapping up assets relinquished to satisfy EU regulators.