Jan. 2 (Bloomberg) -- French billionaire Francois Pinault signaled he may consider a bid for Suez SA after France's stock market regulator demanded he clarify his intentions for the world's second-largest water company.

``All options remain open,'' Artemis, Pinault's holding company, said in an e-mailed statement. Capital magazine last week reported that Pinault may make a 70 billion euro ($92 billion) hostile bid for the Paris-based utility. Suez shares rose to a record.

Suez called Pinault's statement ``vague and imprecise,'' and asked the regulator to demand that Pinault say whether he plans to bid in the next six months. In addition to the water businesses, Suez owns two nuclear plants and the biggest energy provider in Belgium. It also has a fleet of tankers that transport liquefied natural gas.

``Pinault could resell Suez assets that are of interest to an enormous number of parties,'' said Franck Hennin, a fund manager with Richelieu Finance in Paris, which manages $5 billion, including Suez shares. ``He would more than recoup his investment in no time.''

Suez may be a takeover target because its 44.4 billion-euro government-backed merger with state-controlled Gaz de France SA has hit French legal and labor obstacles. France's highest court in November ruled the transaction can't be completed until July, after French presidential elections in May.

Unwanted Predator

``Pinault could push aside things so a transaction could happen more quickly,'' Yann Azuelos, who helps manage $3.5 billion at Meeschaert Asset Management in Paris and holds Suez shares.

The Wall Street Journal earlier reported that Pinault would take a ``wait-and-see posture,'' citing people familiar with the situation.

Suez shares rose as much as 3.2 percent. They closed up 67 cents, or 1.7 percent, at 39.9 euros in Paris, giving the company a market value of 51 billion euros. GDF shares climbed as much as 2.5 percent to 35.73 euros, also a record. They closed unchanged at 34.85 euros.

Suez, which asked the stock market regulator on Dec. 29 to have Pinault clarify its intentions, said today's statement made matters worse.

``The Pinault Group's vague and imprecise statement gives no clear indication of its real intentions and does not give information in a satisfactory manner to the financial markets,'' Suez said in its statement. ``On the contrary, for Suez shareholders it encourages speculation and brings about uncertainty.''

The French market regulator plans to rule on the Suez request in a few days, Reuters reported, citing a spokeswoman it didn't identify. The spokeswoman said AMF had asked all involved to clarify their positions, the news agency reported.

Pinault Fortune

Pinault, 70, has spent a lifetime building a fortune by flipping assets, parlaying a lumber business he took over from his father in law in the 1960s into retailing and luxury goods. Since 2002, family controlled PPR has been shedding businesses, including Printemps department stores, building materials supplier Rexel SA and a lumber business.

The owner of the London-based auction house Christie's International and Venice's 18th century Palazzo Grassi, Pinault is ranked 74th in Forbes' world list of billionaires this year. The only Frenchman in the top 10 is Bernard Arnault, chairman of LVMH Moet Hennessy Louis Vuitton SA, the world's largest luxury- goods maker.

As part of Pinault's plan, GDF would buy Suez's energy business for about 40 billion euros, Capital reported last week. Veolia Environnement SA would be interested in Suez's water and environment unit, the report said. Suez labor unions have said they are opposed to any break up of the group.

Merger Setbacks

PPR credit-default swaps rose to the highest since July today, according to data compiled by Bloomberg.

The cost of a contract based on 10 million euros of PPR debt rose to 54,500 euros from 47,500 euros on Dec. 28, according to prices supplied by Credit Market Analysis in London. Credit-default swaps are financial instruments based on corporate bonds and loans that are used to speculate on a company's ability to repay debt. An increase indicates deteriorating credit quality.

Investors who sell credit-default swaps are paid a quarterly premium, typically for five years. In return they guarantee to pay the buyer 10 million euros should the company fail to adhere to debt agreements.

Suez credit-default swaps fell to 20,500 euros from 22,500 euros on Dec. 29, according to Credit Market Analysis prices.

The GDF-Suez merger plan suffered its first setback on Nov. 22 as a GDF board meeting was postponed when its workers' council, a group consisting of elected employee representatives, won a court ruling to delay the meeting.

Government Plan

French Prime Minister Dominique de Villepin on Feb. 25 announced the combination of Suez and GDF to fend off a possible bid for Suez from Enel SpA, Italy's largest utility.

The French Conseil Constitutionnel on Nov. 30 ruled that the merger of the two companies would have to wait until July 2007, when the market opens to full competition, because GDF is a public service. The merger would cut the state's stake in GDF to 34 percent from about 80 percent.

Both the French government and GDF said last week that they continue to support the merger of GDF and Suez. Jerome Bonnafont, a spokesman for French President Jacques Chirac, denied Capital's claim that the president supports Pinault's plan for Suez.

To contact the reporters on this story: Alan Katz in Paris at akatz5@bloomberg.net; Tom Cahill in Paris at tcahill@bloomberg.net

Last Updated: January 2, 2007 17:39 EST