Veolia agrees deal for arch-rival Suez
Merger of world’s 2 largest water and waste groups after long-running takeover battle reshapes market sector
Veolia has struck a deal to buy its arch-rival Suez, reshaping the water and waste market and putting an end to one of France’s hardest-fought takeover battles in years.
After months of bitter conflict as Suez struggled to stay independent, the world’s two largest waste and water groups said on Monday they had agreed a deal at €20.50 a share — a figure that values Suez’s equity at close to €13bn, according to Veolia.
Suez shares were up 7.5 per cent to €19.80 by mid-morning in Paris, while Veolia rose almost 3 per cent.
The two groups have been in public battle since August, when Veolia bought 29.9 per cent of Suez at €18 a share from France’s Engie and said it wanted to launch a full bid for its rival. Engie will get a top-up on the price it received, according to people familiar with the matter.
As Suez fought the takeover it refused to engage, threw up legal blocks, threatened to sell off assets and put together an alternative offer. Eventually the bid went fully hostile in February.
“I am particularly pleased to announce today the conclusion of an agreement between Suez and Veolia that will enable the construction of the world champion of ecological transformation,” Antoine Frérot, Veolia chief executive, said on Monday.
The combined entity will have €37bn of revenues. The two groups have agreed to enter into definitive merger agreements by May 14.
A “new Suez” will be carved out, “forming a coherent and sustainable group . . . with revenues of around €7bn”. It will be made up of water and waste operations in France as well as some international assets, including in Italy, Africa and India.
Suez and Veolia had flirted with an agreement already, when Frérot put an expanded carve-out of Suez’s French water and waste business on the table.
The new and smaller Suez, which will have an employee shareholder base capped at 10 per cent, will be bought by private equity groups Ardian, GIP and Meridiam as well as French state investment bank Caisse des Dépôts. All were allied with Suez or Veolia during the takeover war.
The majority of the shareholders of the new Suez will be French, according to the companies. The assets involved would be sold by Veolia for a price “coherent” with the overall deal, Frérot said.
The agreement will also deactivate a poison pill put in place by Suez — a Dutch foundation to hold its French water assets whose board members would have veto rights over any disposal — and terminate an agreed sale of Australian assets deemed strategic by Veolia.
Both the foundation and the asset sales were designed to put pressure on Veolia to find an agreement. Suez was also under pressure to reach a deal as Veolia was threatening to vote out its board at this summer’s shareholders’ meeting.