The Netherlands' two largest energy companies said on Thursday that they had reached an agreement to merge, forming a new company worth 24 billion euros ( 31.2 billion U.S. dollars) in equity.

According to their agreement, the two companies Essent NV and Nuon NV will hold 55 percent and 45 percent stake respectively.

The combined company, provisionally named EssenNuon NV, will be among the ten largest energy companies in Europe, with 12 billion euros in sales last year and five million customers.

Essent's Chief Executive Michiel Boersma and financial chief Rinse de Jong will retain their positions in the new company, which will be based in Amsterdam, Nuon's current headquarters.

The companies said they expect to save at least 300 million euros annually through the merger which could lead to considerable cost reductions in general purchasing, information technology and the elimination of duplicate functions.

Around 1,350 jobs will be cut as a result of the merger, a move opposed by labor unions. The two companies now have 20,000 employees in the Netherlands, Belgium and Germany.

The Dutch competition authority NMa, as well as the provinces and municipalities with shares in the companies, still have to officially approve the merger.

The companies hope the merger will give them a stronger position on the European energy market, which has recently seen a wave of mergers.

Source: Xinhua