The French government and Suez were Friday night locked in a final attempt to salvage one of Europe’s biggest energy deals, with both sides set to make concessions to break the impasse over the private utility’s proposed €84bn merger with state-owned Gaz de France.

Suez has dropped its opposition to a spin-off of its environmental business, on condition that it retain at least a 34 per cent blocking stake. The French utility is also proposing to bring in a new group of friendly investors that would agree to join a shareholder pact.