French Finance Minister Thierry Breton announced on Monday the merger of France's state-owned utility group Gaz de France (GDF) with utility giant Suez.

The French government, which owns 80.4 percent of GDF, will end up with about 34 to 35 percent of shares in the new entity. In addition to its "indirect share-holding participation", the French state will control "slightly less than 40 percent overall", remaining the largest shareholder, Breton told French radio RTL.

He said the transaction would take place as a "fusion-absorption of Suez by Gaz de France", creating one of the world's leading energy groups.

"The new group will be number one in gas commercialization, the world's leader in liquefied natural gas and number three in the sector of European electricity," said the minister.

He also said he would talk on Monday with trade unions and supervise employment and public service contracts signed between the French government and GDF.

The two companies issued on Monday a joint statement announcing the merger, which will create one of the world's largest gas companies. It would be finalized in the second half of 2006, with "zero job loss".

"The new group, with a turnover of 64 billion euros (76 billion U.S. dollars), will be among Europe's leading energy and environment companies," said the statement.

Except for the government, no other shareholder will hold a double-digit percentage of the merged group, which will rival in size France's biggest utility firm, Electricite de France (EDF), currently the biggest company of its kind in Europe, according to the statement.

The merger, which will follow the payment by Suez of a dividend of one euro (about 1.2 dollars) per share, a total pay-out of 1.25 billion euros (about 1.5 billion dollars), is seen as a move to block a potential takeover bid of Suez by Italian energy group Enel.

The move was motivated by "the strategic importance of energy for France", according to French Prime Minister Dominique de Villepin.

The Suez-GDF merger announcement comes only days after Italian energy group Enel declared an interest in buying Suez to acquire its Belgian subsidiary Electrabel, the leading utilities company in Belgium, Netherlands and Luxembourg.

Italian Industry Minister Claudio Scajola denounced what he called "neo-protectionism" by France.

Source: Xinhua