Luxembourg’s top energy companies recently announced a plan to merge and create a national champion capable of competing with European peers and adapting to the liberalization and consolidation of the sector.

The new company, with annual sales of over 2 billion euros, would be formed through the merger of CEGEDEL CEGK.LU, the Grand Duchy’s main electricity provider, SOTEG, a local gas supplier and Saar Ferngas (SFG), a German gas distribution company.

“Today, only integrated, international operating utilities with a certain scale have the critical mass to survive the sector consolidation and remain independent,” a statement issued by the companies and the Luxembourg government said.

“CEGEDEL, SFG and SOTEG are particularly exposed to these adverse market conditions as the three companies are rather small in size and only serve markets comparatively small in size and volume.”

The main shareholders will be the state of Luxembourg with 28.3 percent, ArcelorMittal with 25.3 percent, Germany’s RWE with 19.8 percent and E.ON with 10.8 percent as well as France’s Suez with 5.1 percent.

The deal requires an unconditional clearance by competition authorities.