French utility GDF Suez
The announcement came as German utilities E.ON
International Power (IPR) said on Thursday that GDF's indicative approach at 390 pence per share valued it overall at 19.9 billion pounds.
But the price was only slightly above the stock's Wednesday close and the shares were up nearly 6 percent at 406.12 by 1402 GMT.
GDF said a full merger would enable IPR to grow more quickly by increasing its presence in fast-growing emerging markets and enhancing its access to capital.
Analysts also said the deal made good strategic sense given IPR's strong growth prospects.
We have previously highlighted that it would make financial sense for GDF SUEZ to buy out either of its listed minorities, International Power or Suez Environnement
The analyst said International Power's faster earnings per share growth over the medium term would lift GDF's estimated growth rate to 12 percent, compounded annually between 2011 to 2015, from 9 percent.
The move on IPR follows market speculation in recent months that the French utility was set to table an offer for the remaining shares.
BofA Merrill Lynch analyst Fraser McLaren said the offer was at 13 times his 2013 EPS forecast for International Power, but below his stand alone value of 400 pence per share.
The analyst added GDF would likely announce a disposal programme to finance the deal, which meant that most of the accretion could be compensated by EPS dilutive disposals.
GDF Suez would consequently consider a revision upwards of its current disposal plans, GDF said in a statement on Thursday, adding that its top two shareholders supported its proposal to take full control of the British firm.
GDF's single largest shareholder is the French government, with a 36 percent stake.
Citi analyst Peter Atherton said GDF had until April 26 to announce a firm intention to make an offer or confirm it is not going to make an offer.
For GDF Suez, a deal at 390 pence per share would be mid-to-high single-digit percentage accretive to EPS, the analyst said. Buying-in the remaining minorities at IPR would be positive for GDF Suez, both financially and strategically.
GDF completed its acquisition of 70 percent of the British group in February 2011, creating the world's largest independent power producer. At the time it agreed not to bid for the remaining shares for 18 months, a lock-up which expires on August 4.
Analysts have said GDF Suez could buy out the remaining stake earlier with the agreement of the British group's independent non-executive directors.
The proposal is subject to certain pre-conditions and there can be no certainty that an offer will ultimately be forthcoming, International Power said in its statement.
(Additional reporting by James Regan and Christian Plumb in Paris; Editing by David Cowell)