Italian utility Enel will postpone making a bid for France's Suez until after Italy's general election on April 9 thelection and may not launch a hostile takeover at all.
Les Echosdaily said, quoting a source close to Enel, that its board should formally put the bid plans on ice at a meeting later today. Enel declined to comment on the report.
The company's board is due to meet today to approve 2005 results before Italy's biggest power group presents its strategy in London tomorrow.
According to the newspaper, the Italian government, which controls about 32 per cent of Enel, wants to avoid an escalation of the war of words between Rome and Paris in the run-up to the election.
Enel said last month it may bid for Suez to win the prize energy asset, Belgian Electrabel. It has not made any formal offer.
The suggestion met fierce opposition in France, where the government announced a €70 billion merger between Suez and state-controlled Gaz de France days after Enel first mentioned its plan to move across the Alps.
Enel CEO Fulvio Conti held talks with EU Competition Commissioner Neelie Kroes and Internal Market Commissioner Charlie McCreevy about the situation on Tuesday.
"We have clarified Enel's willingness to play a relevant role in the energy sector within an open and competitive Europe, thus providing greater benefits to consumers, companies and families," he said in a statement after the talks.