A French court on Tuesday put the brakes on the merger of the utilities Gaz de France and Suez, saying workers needed more information about the deal.
The court barred Gaz de France, the state-owned natural gas company, from "making any decision relating to the merger" until workers had a chance to express their opinion.
In a 14-page decision, Judge Philippe Herald of the Tribunal de Grande Instance in Paris also wrote that the unions had not been provided with "verifiably clear information or solid estimates" on jobs at the new company.
The court did not give the unions a deadline by which they needed to produce their formal opinion on the merger. Such an opinion is required under French law for the deal - first announced in February 2006 but revised last September - to proceed.
"This will not necessarily delay the merger," a Gaz de France lawyer, Gilles Bélier, said. Asked whether the utility would appeal, Bélier said, "We will see."
Gaz de France sought an opinion from the unions on Dec. 20. Union representatives have said they were not given enough time to review the latest merger details, especially plans for a spinoff of Suez Environnement, the water and waste-management business of Suez.
The court barred Gaz de France, the state-owned natural gas company, from "making any decision relating to the merger" until workers had a chance to express their opinion.
In a 14-page decision, Judge Philippe Herald of the Tribunal de Grande Instance in Paris also wrote that the unions had not been provided with "verifiably clear information or solid estimates" on jobs at the new company.
The court did not give the unions a deadline by which they needed to produce their formal opinion on the merger. Such an opinion is required under French law for the deal - first announced in February 2006 but revised last September - to proceed.
"This will not necessarily delay the merger," a Gaz de France lawyer, Gilles Bélier, said. Asked whether the utility would appeal, Bélier said, "We will see."
Gaz de France sought an opinion from the unions on Dec. 20. Union representatives have said they were not given enough time to review the latest merger details, especially plans for a spinoff of Suez Environnement, the water and waste-management business of Suez.
"The merger isn't put into question, but it could be delayed," said Emmanuel Rétif, an analyst at Raymond James Asset Management in Paris. "There is still the possibility it could go through in the first half of the year if the unions give an opinion within two months."
Gaz de France shares fell €2.09, or 5.7 percent, to close at €34.80, or $50.86, in Paris on Tuesday. Suez shares fell €1.04, or 2.5 percent, to close at €40.15.
The outlines of the new company, to be called GDF Suez, were approved by the boards of the two companies in September. President Nicolas Sarkozy of France helped to broker the deal.
The combined company would be one of the top three listed utilities worldwide, but the project has been mired in political, legal and financial problems. French unions opposed the deal - both the original and updated versions - because it requires privatizing Gaz de France. Sarkozy had pledged as finance minister in 2004 not to privatize Gaz de France.
Under the new terms, after the spin-off of Suez's environmental activities, the French state would be the new company's largest shareholder with a 35 percent stake. The state now has a 79.8 percent stake in Gaz de France.
The Paris court ruled that the updated project was "clearly different" from the previous version, requiring further worker consultation.
Alain Levy, a lawyer for the workers' council, welcome the court's decision as "excellent." After consultations with the unions, the two companies must hold shareholder meetings and submit the plan to the Autorité des Marchés Financiers, the French market regulator.
Gaz de France shares fell €2.09, or 5.7 percent, to close at €34.80, or $50.86, in Paris on Tuesday. Suez shares fell €1.04, or 2.5 percent, to close at €40.15.
The outlines of the new company, to be called GDF Suez, were approved by the boards of the two companies in September. President Nicolas Sarkozy of France helped to broker the deal.
The combined company would be one of the top three listed utilities worldwide, but the project has been mired in political, legal and financial problems. French unions opposed the deal - both the original and updated versions - because it requires privatizing Gaz de France. Sarkozy had pledged as finance minister in 2004 not to privatize Gaz de France.
Under the new terms, after the spin-off of Suez's environmental activities, the French state would be the new company's largest shareholder with a 35 percent stake. The state now has a 79.8 percent stake in Gaz de France.
The Paris court ruled that the updated project was "clearly different" from the previous version, requiring further worker consultation.
Alain Levy, a lawyer for the workers' council, welcome the court's decision as "excellent." After consultations with the unions, the two companies must hold shareholder meetings and submit the plan to the Autorité des Marchés Financiers, the French market regulator.
Source: IHT/Associated Press/Bloomberg
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