The Wall Street Journal-20080123-French Court-s Ruling Snags GDF-Suez Deal
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French Court's Ruling Snags GDF-Suez Deal
The long-discussed merger between Gaz de France SA and Suez SA has hit another road block.
A Paris court ruled yesterday that GDF must give union representatives more information on the planned merger, which would create a European natural-gas and energy giant. It also barred GDF from making further decisions regarding the merger with Suez until workers' representatives have given their opinion.
Based on figures from last year, the combined company would have 72 billion euros ($105 billion) in revenue. The French government will hold a stake of about 35%. Its creation at the behest of France's political leaders has been a contentious issue in Europe, where European Union officials have discouraged efforts by its member nations to create national champions.
The court judged that the merger project has changed from the one initially presented to the unions. GDF now plans to deal exclusively with a newly elected workers' council that has yet to be fully composed.
In Paris, GDF shares slid 5.7% to 34.80 euros ($50.88), while Suez shares dropped 2.5% to 40.15 euros.
GDF said it aims to complete the merger in this year's first half as planned. The merger was proposed about two years ago.
Alain Levy, a lawyer for the workers' council, described the court decision as "excellent," the Associated Press reported.
The process of informing the unions has been dragging on for months. GDF had hoped the court would set a deadline for its union representatives to give an opinion on the merger, or rule that since the employees and unions haven't given an opinion that they would be considered to have given tacit assent.
The workers' councils, made up of union representatives, must give an opinion for the merger to go ahead. While their opinion is nonbinding, they can hold up the deal by not giving a view.
