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ARDIAN / GIP won't participate in the NEw deal say Ardiann head of infrastructure. Just spoke with Veolia Advisor, it does not put the current agreemnt into jeopardy. According top the Advisor Ardian was views on valuation were just inadequate, and let's not forget that they are pocketing EUR 50m for nothing underr the terms of the agreement they struck with Suez.

A new twist in a saga that has never been short: the Ardian and GIP investment funds will not participate in the "new Suez" project, the future group foreseen by the merger agreement between Suez and Veolia.

"After nine months of review, we are not satisfied with the project that has just been chosen. We will not be part of it," Ardian Infrastructure boss Mathias Burghardt told Les Echos on Tuesday night.

The agreement reached on 11 April between Veolia and Suez to end eight months of war over the takeover of one over the other is "not acceptable" for the two funds, announced yet among the takers of the future Suez from the deal.

The Franco-American consortium, which had not been involved in the latest negotiations between the two water and waste giants, cited "several sticking points", including the perimeter of the future Suez and its governance.

Since then, "we have not had any discussions with the Ministry of Finance or talks to try to work out an agreement," Burghardt said. "We have in no way tried to unravel the new project between Suez and Veolia. The question was: are we able to participate? And the answer was no." For GIP-Ardian, "a number of topics" were "problematic", including the fact that the future Suez comprises only 25% of international activities, and none in the United States. They "would have liked a better balance between French and international activities," a spokeswoman told AFP.

Regarding the governance of the future Suez, the project provided 40% for this consortium, 40% for the Meridiam fund, the rest going to the Caisse des dépôts (CDC) and to salaried shareholders.

"Ardian and GIP are investing in companies in which they have the means to implement their industrial strategy," it adds. Clearly, 20% each does not make a majority.

Finally, the consortium cites the importance of Suez's "support of the social body" for the project.

On the trade union side, the CGT secretary of the Works Council Franck Reinhold von Essen expressed a "feeling of betrayal" as soon as the agreement was known, believing that "the means of negotiating something else existed".

A majority French shareholding

On 11 April, after nearly eight months of battle, the leaders of Veolia and Suez finally agreed that the former would absorb a large part of the latter and form a "champion" of water and waste weighing some 37 billion euros.

The agreement in principle, reached after mediation by former Suez boss Gérard Mestrallet, provides for the maintenance of a Suez representing 7 billion euros in revenue, less than half of the current group. Mainly concentrated in France, the company would have been taken over by GIP-Ardian, Meridiam and the CDC, for a majority French shareholding. But GIP and Ardian were not at the table at the Bristol Hotel.

"We're going to have to work with them," Varin said on April 12. "Our agreement is an agreement in principle. The detailed terms must now be drawn up, of course this implies discussions that will take place in particular in the coming month," he said.

Suez's management had asked Ardian as early as last fall to make it its alternative takeover in the face of Veolia's proposed takeover bid.

Veolia bought 29.9% of Suez from Engie in early October, before launching a takeover bid for the rest of the shares, much to the chagrin of its beleaguered rival.

In order to take over Suez's activities, which the anti-trust laws would prohibit it from keeping, the number one in the sector had entered into a resale agreement with the Meridiam fund.

The latter confirmed after the agreement of 11 April that it was ready to take a stake of "at least" 40% in the new Suez.

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