Battle to replace Suez chief and chairman heats up
Tensions rise over who to appoint at the top of French water and waste company
Suez is gearing up to appoint a new chief executive and chairman as the French water and waste company comes under pressure from activists and rivals looking to take advantage of its faltering share price.
The group’s current chief executive and chairman — Jean-Louis Chaussade and Gérard Mestrallet, respectively — will leave their current roles next May due to statutory age limits.
The battle to replace them has grown heated, according to people familiar with the matter, and tensions may come to a head at a board meeting planned for Thursday.
Isabelle Kocher’s Engie, the largest shareholder in Suez with a 32 per cent stake, is at odds with Mr Mestrallet, who until recently was chairman of the French energy utility and before that Ms Kocher’s predecessor as chief executive.
The relationship between Ms Kocher and Mr Mestrallet has been strained in recent years and is under renewed pressure over the decision of who to put at the top of Suez.
“There's clearly some scenario where there will be a clash before or during the board meeting between the Mestrallet camp and the Kocher camp, which is more than unhelpful,” said one person close to the situation. “These things [the appointment of a new leadership team] should be a positive event for Suez . . . all the more so since the company is in a vulnerable state.”
Suez shares have fallen almost 20 per cent in the year to date, having never really recovered from a profit warning in January. The group is also under pressure from activist investor Amber Capital, which bought about 1 per cent of the company earlier this year and is pushing it to sell some water assets.
More broadly, a merger with larger French rival Veolia has long been mooted, even if it would require approval from competition authorities and involve disposals in France. Mr Chaussade has said he thinks such a merger would destroy value.
Ahead of leaving the company, Mr Mestrallet is pushing for Mr Chaussade to move from the chief executive position to the chairmanship. An external candidate for chief executive would help his argument that Mr Chaussade provides needed continuity — something some investors are wary of given Suez’s recent performance.
But it is Engie that is likely to have the largest say. People close to the energy group argue that it would be better for Suez to have a clean start, and that having a former chief executive as chairman risks hampering a new CEO’s ability to transform its performance.
An internal candidate for chief executive is the most probable outcome if Engie gets its way, according to people familiar with the process. Jean-Marc Boursier, chief financial officer, Marie-Ange Debon, head of France, and Bertrand Camus, who looks after much of the company’s international operations, are in the running.
Having an Engie appointee as chairman would also strengthen the utility’s hand as it decides what to do with Suez in the longer term. Pierre Mongin, a senior Engie executive who sits on the Suez board, is a prominent candidate.
Engie gave some clarity as to its wider intentions for Suez earlier this month when it said it wanted to “actively support” its development “by maintaining its current level of ownership” following months of speculation about a possible stake increase or a sale.
But many investors felt that statement did not give enough clarity about its intentions and it must decide what it wants to do longer term. Engie itself is coming to the end of one strategic plan and will present a new one in February.
“A bad outcome at Suez would also be a bad outcome for Engie,” said one Paris banker. “If Engie doesn’t control the decision making chain down to Suez, the whole thing will become painful.”
Suez, Engie and Mr Mestrallet declined to comment.