PARIS Shares in French utility Suez climbed on Tuesday after business radio station BFM reported that Engie - which already owns 33 percent of Suez - was examining a full takeover bid.
Suez shares rose by around 4.7 percent at mid-afternoon, making them the top-performing stock on France's SBF-120 equity index, which was up 0.42 percent.
BFM reported that Engie's chief executive, Isabelle Kocher, had been lobbying leading French conservative and center-right politicians over the idea. Political support is essential because the French state holds 33 percent of Engie, with French presidential elections due next year in April and May.
BFM added that Engie would make a decision on the future of Suez after the presidential election and by the end of 2018.
Asked about the BFM report, officials at both Engie and Suez said their companies did not comment on market speculation.
Suez has a market capitalization of roughly 8 billion euros ($8.3 billion), while Engie's market capitalization is around 30 billion euros.
Speculation about an Engie bid for Suez has surfaced before, with Engie denying in November 2015 media reports that it had mandated a bank to draw up plans over its relationship with Suez.
The BFM story did not outline any reasons behind the consolidation, but the two companies have links that date back to a state-backed industry reorganization more than eight years ago, justified at the time on grounds of strategic importance.
Engie - a new name adopted in 2015 in place of GDF Suez - was the product of a 2008 merger between the French gas monopoly Gaz de France, and Cie de Suez, an electricity firm whose history dates back to the 19th century construction of the Suez canal in Egypt.
In a second stage of the 2008 reorganization, the merged entity spun off its waste and water operations into a separate business called Suez Environnement, which has since shortened its name to Suez.
Pierre Antoine Chazal, an analyst at brokerage Bryan Garnier, said that while an eventual deal could make sense in the longer term, he did not expect Engie to make a move for Suez now.
"In the near term, a tie-up does not make sense, neither for Engie nor for Suez, both of which are already engaged between now and 2018 in their own company restructurings," he said.
Engie's Kocher said earlier this month that Engie was in the "contraction phase" of a three-year restructuring, that will entail a large-scale asset sale program.
(Additional reporting by Gwenaelle Barzic; Writing by Sudip Kar-Gupta; Editing by Andrew Callus and Ruth Pitchford)