The UK’s International Power has signed an agreement with France’s GDF Suez that will see it merge with the international arm of the French company.

The proposed combination, as set out in the memorandum of understanding (MOU), will see GDF Suez Energy International taken over by International Power in exchange for newly issued International Power shares.

The enlarged company will be listed on the official list of the Financial Services Authority (FSA) and traded on the main market of the London Stock Exchange.

Following the completion of the merger, International Power shareholders will own 30 per cent of the enlarged company, New International Power and GDF Suez will own 70 per cent.

New International Power will comprise International Power’s business and GDF Suez’s business areas outside of Europe together with its operations in the UK and Turkey.

The new company will have 66GW gross capacity currently in operation and a further 22GW capacity in committed projects.

Through the merger, International Power hopes to build its presence in Latin America and secure greater exposure to opportunities in Asia and the Middle East.

The board of the new company will be headed by Dirk Beeuwsaert as non-executive chairman and Philip Cox as chief executive officer.

The tie-up is contingent upon the consent of International Power’s shareholders. International Power’s board of directors will unanimously recommend that they do so. 

Completion of the deal is expected by early 2011.