Suez, the French energy group, has launched an E11.2 billion bid for the 49.9% of Belgian electricity incumbent Electrabel it does not already own.

Suez currently holds a 50.08% of Electrabel’s share capital and had come under increasing pressure over the past year to extend its control over the company. Suez is now thought to be eager to take advantage of rising electricity prices across Europe, where it stands as the fourth largest electricity utility by sales.

The deal, which will see Suez offer E322 in cash and four of its own shares for each Electrabel share, values Belgium’s largest electricity supplier at E22.5 billion. Suez said that the deal would generate cost savings of E350 million a year once the buyout was completed.

The board of Suez described the offer as a decisive step towards a streamlined and integrated Franco-Belgian group, a European leader in the growing energy and environment sectors.

In addition, the board of Suez also approved the principle of a E2.5 billion rights issue which could take place within the next 12 months, depending on market conditions.

The new group, thanks to the quality of its Belgian, French and international teams, their expertise and knowledge, and through its solid financial structure, will be well positioned to respond to the significantly growing energy and environmental services needs in Europe, stated Suez chairman and chief executive officer, Gerard Mestrallet.