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16 January 2007 - Knight Vinke has abandoned its fierce battle against the proposed merger of Gaz de France and Suez, after selling its Suez stake in an unexpected move that is likely to damp bid speculation surrounding the private French utility.
The activist investor, which first began agitating for a break-up of Suez's energy and environmental businesses some two years ago, is understood to have sold at least half of its nearly 1 per cent holding in Suez to Albert Frère, the Belgian entrepreneur now believed to hold more than 10 per cent of the group. At yesterday's close Suez was valued at €50.5bn ($65bn).
Analysts suggested yesterday that the sale would calm some of the bid speculation that has been focused on Suez since its planned merger with state-controlled GdF ran into difficulties.
However, questions still remain over the decision by Mr Frère to bolster his stake in recent days.
Some French media have speculated that Mr Frère could be preparing alternatives, or at the very least bolstering his position, should the hoped-for merger prove too difficult in the face of political uncertainties.
In any case, Knight Vinke appears to have made a significant return on its three-year investment. The group took its first stake in Suez in January 2004 at a price of €16.75 a share, and has paid an overall average price in the low €20s for its holding. It sold its 11m shares at between €39 and €40 each, according to the company.
Eric Knight, who founded the investment group, yesterday said his campaign against the terms of the GdF merger had helped to focus attention on the true value of Suez. Mr Knight took out dozens of ads in French and British newspapers last year, urging shareholders to vote against the deal as structured.
"We have made it impossible for the French state to expropriate Suez shareholders at €32 a share," he said. Moreover, his campaign had "opened people's eyes to the true value not only of [Suez's Belgian electricity subsidiary] Electrabel but also to the environment business," he said.
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