Cassa depositi e Prestiti S.p.A. is reportedly considering whether to merge Italy's two gas distributors with joint assets of roughly €8 billion as the sector gears up for major reform, four people familiar with the matter said. A second source said the merger of Italgas SpA and 2i Rete Gas S.p.A. was Cassa depositi e Prestiti's favorite plan but other options, including a stock market listing of Italgas, were being considered because of the risk a merger might not be approved on antitrust grounds. "These are early stage discussions but the idea is on the table," said one source, cautioning that no deal was certain and talks could still fall apart.

"A tie-up makes sense since the business is going to need big investments in coming years and Rome needs to create national champions in what is a strategic sector," a third source said. "Infrastructure and pension funds have been interested in the asset and could well be interested in the future," the banker said. Cassa depositi e Prestiti and F2i Reti Italia S.r.l. which controls 2i Rete Gas, declined to comment.