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Mon 3 Sep 2007 10:56 AM

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Suez, Gaz de France merger approved

Combined company will be one of the top three listed utilities companies worldwide.

The boards of directors of Gaz de France and Belgian industrial firm Suez have approved the new outline of a merger, which will create what the boards say will be one of the top three listed utilities worldwide, with particular strength in gas and electricity.

The transaction will close as early as possible in 2008, the companies said in a statement, while the merger will be executed on the basis of an exchange of 21 Gaz de France shares for 22 Suez shares via the absorption of Suez by Gaz de France. The French state will directly hold 35% of the new group, to be known as GDF Suez.

At the same time as the merger, there will be a 65% spin-off of the water and waste management activities of Suez Environment in the form of an initial public offering (IPO). GDF Suez and the main Suez shareholders will hold respectively 35% and approximately 12% of the environment activities of Suez at the completion of this transaction.

The boards noted that the recent developments in the energy sector reinforced the strategic and industrial logic behind the merger, which will create Europe's fifth largest power producer and its largest buyer and seller of gas, with a combined stock market capitalisation of approximately $123 billion, revenues of $98 billion, and confirmed operational synergies of $1.36 billion per year by 2013.

Gérard Mestrallet, chairman and chief executive officer, will run the new group jointly with Jean-François Cirelli, vice-chairman and president.

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