IP rejects rival’s takeover bid

WHAT started as a friendly deal between two energy powerhouses has descended into a game of chicken.

On one side is the Britishbased FTSE 100 energy generator International Power, which boasts operations across the world with the total capacity to power more than 75m homes.

Staring it down is French government-owned GDF Suez, the largest energy producer in the world with a market value of almost £40bn.

GDF already holds a 70pc stake in International Power (IP) which it acquired in 2010, but is vying to take on the remaining 30pc. But it yesterday threatened to call off the bid after its initial offer of £5.95bn for the remaining stake was batted away.

IP yesterday said the price tag of 390p a share ‘undervalues’ the company.

GDF immediately responded by saying it ‘will consider its different options, including the possibility to withdraw its At stake: International Power operates 11 plants in the UK proposed offer’. The French were now holding out for giant’s attempts to woo an increase of 15p a share, minority shareholders have which would take the pricetag been hindered by Invesco Perpetual’s to the same level as Woodford star fund manager achieved. Neil Woodford. ‘The biggest holders will be

Earlier this week he sold a happy to settle for a little over third of his stake in IP for 405p that [current price],’ said the a share, in a move that rival investor. fund managers will see as the GDF has already pledged to benchmark price to sell their pay out £5.95bn for the remaining interests. stake in the company.

A major shareholder last But meeting the higher price night said the largest investors demand will set it back a further quarter of a billion pounds.

The 2010 deal between the two saw GDF take a 70pc stake in IP, in exchange for the British group taking on its power generation operations outside of France.

To sweeten the deal, GDF paid out a special dividend of £1.4bn.

It was always believed that the move was a springboard to a full takeover, which would give GDF exposure to fastgrowing markets such as Brazil.

It now has until 26 April to make a firm offer for the group, although International Power can ask for an extension to be granted by the Takeover Panel.

International Power employs 750 people across 11 power plants in the UK. GDF has 219,000 employees across 70 countries.

But GDF plans to ‘simplify’ the overall company – meaning that some British roles could be axed.

IP shares yesterday dropped 0.8p to 402.2p.