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Suez thanks lucky star

Financial Times: Suez thanks lucky star

“Gérard Mestrallet could not have picked a better moment to buy Shell’s interests in two Belgian gas companies.”

By Paul Betts

Published: September 9 2004

It may be coincidence, but Gérard Mestrallet could not have picked a better moment to buy Shell’s interests in two Belgian gas companies.

The deal is part of the Suez boss’s new strategy of refocusing resources to boost his European electricity and gas operations to challenge, above all, his two big French state rivals: Electricité de France and Gaz de France. After buying stakes in smaller French electricity companies, he is strengthening his gas business to take advantage of energy liberalisation.

All this on the same day as the French government attempted to resolve the internal drama at EdF by replacing its chairman with the chairman of GdF. Paris has destabilised both its electricity utility and its gas company, now deprived of the man who ran it successfully for 17 years. Mr Mestrallet can thank his lucky star.

Barely a year ago, Mr Mestrallet also seemed on the ejector seat. Like EdF’s dethroned chairman François Roussely, he landed Suez in a financial mess because of rash international acquisitions. Like Mr Roussely, he subsequently retrenched on his core domestic business with massive asset sales.

For all the pressure put on him, Mr Mestrallet’s shareholders allowed him to pursue his turnround, with Suez now back in profit. Mr Roussely’s political masters did the opposite, indulging in intrigue and power struggles. The moral: it is easier to run a private business, even with awkward shareholders, than a nationalised one – and the pay is infinitely better.

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