GDF bid powers surge in International share price

By PETER RANSCOMBE
Published on 29/03/2012 21:00

SHARES in utilities firm International Power rocketed to the top of the FTSE risers’ board yesterday after French energy giant GDF Suez launched a £6 billion bid for the 30 per cent of the firm it doesn’t already own.

The approach at 390p a share by GDF values International Power at just under £20bn but came at only a slight premium to Wednesday’s closing price.

GDF, which took its stake in the firm to 70 per cent in February 2011, said the takeover would allow International Power to grow more quickly by increasing its presence in fast-growing emerging markets and enhancing its access to capital.

Analysts also said the deal made good strategic sense given the British company’s strong growth prospects.

Goldman Sachs analyst Andrew Mead said: “We have previously highlighted it would make financial sense for GDF to buy out either of its listed minorities, International Power or Suez Environnement. On our estimates GDF has balance-sheet capacity to buy the minorities for cash.”

BofA Merrill Lynch analyst Fraser McLaren added that the offer was at 13 times his 2013 earnings-per-share (EPS) forecast for International Power, but below his stand alone value for the company of 400p.

McLaren added that GDF would likely announce a disposal programme to finance the deal, which meant that most of the accretion could be compensated by EPS dilutive disposals.

GDF’s single largest shareholder is the French government, with a 36 per cent stake.

Citi analyst Peter Atherton said GDF has until 26 April to announce a firm intention to make an offer or confirm it is not going to make an offer. He said: “Buying the remaining minorities at International Power would be positive for GDF Suez, financially and strategically.”

International Power’s shares rose 5.6 per cent to 405p.