Shareholders turn up the heat in GdF Sueza merger dividend fight

“If that’s not the case, Suez shareholders won’t vote in favour of the merger in the general meeting,” he said.

Another Suez shareholder, Eric Knight, managing director of Knight Vinke Asset Management, took out a full-page advert in Le Figaro newspaper, on a page opposite an interview with Mr de Villepin, to denounce the merger conditions as “perfectly unacceptable”.

Mr Knight, who claims to have rallied shareholders representing about 15 per cent of Suez’s capital, demanded a dividend of up to €7. He said that he would reject a dividend of €3.5 when the deal is put to Suez shareholders next month.

GdF and the French Government, which holds an 80.2 per cent stake in the gas distributor, are fighting to limit the pay-out to Suez’s investors. With a €3 dividend per share costing a total of €3.6 billion, Thierry Breton, the French Finance Minister, gave warning to Suez investors against being “too greedy”.

“I won’t pay a penny more than necessary,” he said on Monday, claiming that he was prepared to call off the deal if the cost was too high. “This merger will only happen at the right price,” he said.

However, analysts said that the Government could ill- afford the tie-up to fail. Mr de Villepin has promoted the merger as a central plank of his economic patriotism, enabling Suez to escape takeover by Enel, its Italian rival. He has brushed aside opposition from within his own centre-right party and overcome the hostility of French unions and the European Commission.

Patrice Lambert de Diesbach, an analyst at CIC Securities, said that both sides were “getting theatrical to increase the pressure to a maximum . . . but even the most virulent will probably agree to a reasonable transaction”, which would involve a €3 dividend, he said.

The new group, which President Chirac wants to be named Gaz de France-Suez, would have sales of €63 billion and would be France’s fourth-biggest company.

The parity was due to be set at Suez and GdF board meetings today, but yesterday GdF unions won a court ruling postponing the group’s meeting, which set back the merger timetable several months. GdF was appealing last night.

With a presidential election looming next spring and the merger contested by Ségolène Royal, the Socialist candidate, the Government has sought to win public opinion by pledging to retain a third of the capital of the new group.

Suez shareholders say that this amounts to a partial nationalisation and undermines the value of the merged company, whose policies could be dictated by political concerns.

Four with something at stake

Albert Frère, 70, the billionaire Belgian investor, whose first job involved selling nails, has become a key figure in the French business world and owns 8 per cent of Suez. He says that he will back the merger with Gaz de France, but only if the dividend is increased.

Gérard Mestrallet, 57, the chairman of Suez, is one of France’s most respected business figures after turning the utility into a global player. He will become chairman of the merged group and is pressing for Suez shareholders to be given a bigger dividend to calm their rebellion.

Jean-François Cirelli, 47, the chairman of Gaz de France, threatened to resign unless he and other gas executives were given significant roles under the plans for a merger with Suez. He was granted the post of vice-chairman and is now fighting on a second front to limit the dividend for Suez investors.

Thierry Breton, 51, the French Finance Minister, will claim a merger of Suez and Gaz de France as a personal triumph after encountering opposition from MPs, unions and Brussels. His aura will be tainted if the dividend to Suez shareholders is raised significantly — and tainted still further if they reject the merger altogether