French utility Suez will have to raise its one-off dividend to complete its merger with rival Gaz de France in the face of shareholder discontent, according to bankers close to the deal.

One said: "We don't see how it can avoid increasing the dividend. The political momentum is there for this deal to go through after a difficult period." The proposed merger will take the form of an exchange of shares on a one-for-one basis, with Suez shareholders offered an exceptional dividend of €1.25bn ($1.58bn), equivalent to €1 per share. The move comes a week after nine Suez shareholders voiced concerns about the merger in a letter to Gérard Mestrallet and Albert Frère, chief executive and vice-chairman of the group. Institutional Shareholder Services, a corporate governance agency, which saw a copy of the letter, said the shareholders believed the terms of the merger undervalued Suez. The shareholders called for a fairness opinion from the group's advisers – JP Morgan, Rothschild, BNP Paribas, HSBC, Morgan Stanley, Calyon and UBS. Gaz de France is being advised by Merrill Lynch, Lazard, Société Générale, ABN Amro, Lehman Brothers and Goldman Sachs. Suez has not responded. GdF has yet to complete trade union negotiations and sign off with French regulator Autorité des Marchés Financiers before a shareholder vote at Suez can take place. This is not expected until at least the last two weeks of December. Financial News revealed in March that bankers had begun working on the deal the previous summer. The offer was made in February. But the takeover appeared to be drawing closer to completion last week after the French senate approved a government plan to reduce its stake in GdF, a crucial element in the deal.