Newspaper article The Evening Standard (London, England)

International Power Shares Surge after Takeover Talk; MARKET ROUND-UP

Newspaper article The Evening Standard (London, England)

International Power Shares Surge after Takeover Talk; MARKET ROUND-UP

Article excerpt

Byline: Rosamund Urwin

SPECULATION of a takeover or tie-up saw International Power soar to the top of the Footsie winners' list today.

The FTSE 100 energy group jumped 14p to 336p, a rise of more than 4%, on reports that it is in talks with French power giant GDF Suez.

International Power, which owns the huge coal-fired power station at Rugeley in Staffordshire, is said to have held discussions with state-controlled GDF about creating a partnership involving their foreign assets. Such a deal would create one of the biggest electricity tie-ups in the world.

Shares in International Power have risen by more than a quarter since early November as rumours of GDF's interest in the group refused to die. They shot up 4% on Friday alone as investors bet that a deal was imminent.

Citigroup notes that GDF's subsidiary Tractebel has a similar business model to International Power, but that the two companies have a limited overlap in terms of operations, except at their Middle Eastern divisions.

Speculation in the French press suggests GDF would favour buying assets from International Power rather than an outright takeover.

But talk has been of an offer at around the 400p mark, although the Canary Wharf big-hitter reckons that GDF could pay a stonking 650p and still regard the move as giving a boost to earnings. Citigroup reckons International Power would be open to a bid if the price was high enough.

Analysts at the bank said: "Although International Power's business model has weathered the recession, it may prove difficult to reignite significant growth. Therefore, it is possible IP may be open to offers for the company, but we would expect management to seek a price materially above 350p per share."

Citigroup has raised its price target for the shares from 290p to 320p thanks to the lifting of uncertainty surrounding its US operations. …

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