GDF, Duke In Talks To Merge Latin America Electric Assets - Report

International Power GDF Suez is in talks with Duke Energy Corp. (DUK) to possibly merge the companies' Latin American assets, Valor Economico newspaper reported Tuesday.

International Power GDF Suez, the combined international assets of French power operator GDF Suez SA (GSZ.FR) and International Power PLC (IPR.LN, IPRPY) have signed an agreement which grants exclusive negotiating rights for the assets, the Brazilian newspaper said, citing people close to the deal it didn't name.

Suez would take a 60% to 70% stake in the joint venture, which would start with a market value of about 30 billion Brazilian reais ($19 billion) and installed capacity of 15,000 megawatts. Duke would hold the remaining 30% to 40%, Valor said.

The talks include all of Duke's Brazilian assets, which include Geracao Paranapanema, which is investing an estimated BRL2 billion to build a natural-gas fired power plant, Valor said. Duke has about 4,500 MW of installed capacity in Latin America.

Duke has failed to make any investments in the region, even failing to meet expansion plans made when Paranapanema was bought from the state government of Sao Paulo in the 1990s, Valor said. The company had been seeking buyers for its assets outside the U.S. since the 2008 financial crisis, the newspaper said.

The talks may exclude Suez's assets in Brazil, which includes a stake in the Jirau hydroelectric dam being built, and control of Tractebel Energia (TBLE3.BR, TBLEY), Brazil's biggest private electricity generator, with 6,000 MW of capacity, Valor said.

Suez has about 3,170 MW of capacity in the rest of Latin America and is building another 1,200 MW in the region, Valor said.

Suez representatives in Brazil didn't return calls from Dow Jones Newswires seeking comment. A Duke representative declined to comment.

-By Paulo Winterstein, Dow Jones Newswires; 55-11-3544-7073; [e-mail]