Gaz de France to Buy Suez, Thwarting Bid by Italy’s Enel

State-controlled Gaz de France is buying the French energy and water utility Suez in a hastily arranged $46-billion-plus deal that would create one of the world’s largest power companies and head off a possible bid for Suez by the Italian utility Enel.

The government-backed deal also answers growing French concerns about the security of energy supplies, both companies said Monday.

The combined utility company would have a market capitalization of about 72 billion euros ($85 billion) and annual revenue of 64 billion euros ($76 billion). It would be second only to Germany’s E.On in Europe by market capitalization, and it would control the continent’s largest gas transport and distribution network.

The plan was first announced by French Prime Minister Dominique de Villepin on Saturday, three days after Italy’s largest power company, Enel, confirmed its interest in Electrabel, Suez’s Belgian power unit.

Italian Foreign Minister Gianfranco Fini fiercely criticized France for what he called a protectionist move and demanded an EU probe.

The deal’s structure -- in which GDF would buy the much larger Suez -- may help the French government politically as it tries to sell GDF’s sensitive privatization to the trade unions and voters at large, in a preelection year.

The government had promised to maintain control of GDF when it sold a 20% stake in the gas company last year, against heavy union opposition.

The deal would require changes to a 2004 law that compels the government to maintain at least 70% of GDF. If completed, the deal would leave the French state with a 34% stake in the combined company.

Finance Minister Thierry Breton said the deal would close toward the end of the year.