Veolia moves on Suez to try to forge new global player
French infrastructure group’s €2.9bn bid for stake held by Engie is prelude to a full offer
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Veolia, the French water, waste management and energy group, said it was offering to buy 29.9 per cent of Suez held by utility group Engie for €2.91bn as a prelude to launching a full bid for its rival.
“Our aim is to bring together and merge these two companies,” Antoine Frérot, chief executive, told the FT on Sunday night.
“Size is crucial In the global market that is being built up and developed right now,” he said.
A full merger of Veolia and Suez would create a global company with annual turnover of some €40bn, a combination Mr Frérot likened to a football merger of Manchester United and Manchester City.
“It’s with this combined size that we’ll be able to invest in the installations needed, and finance and eventually amortise our innovation and research and development costs,” he added.
The first stage of the planned takeover is the bid for 29.9 per cent of Suez held by Engie, which is just below the threshold requiring a full public offer. Engie owns a total of 32 per cent of Suez and said at the end of July it was changing its stance on the stake and was now looking at its options instead of hanging on as Suez’s main shareholder.
Veolia is offering €15.58 per Suez share in cash, a premium of 50 per cent over the price the day before the Engie announcement.
Engie’s change of tune was “a historic chance” for Veolia to pursue its plan to create “the global super-champion of ecological transformation”, Mr Frérot said.
“It’s now or never,” Mr Frérot added, noting that many countries and regions — including the EU with its “green new deal” — were developing plans to help their economies recover from the coronavirus-induced recession by harnessing environmentally friendly policies.
A full merger, which Veolia said it envisaged within 12-18 months after regulatory clearances, would require the sale for competition reasons of Suez’s French water operations because the duo are the main businesses in the country selling their services to municipalities and industries.
Veolia said it had a binding commitment from Meridiam to buy Suez’s French water business.
In the rest of the world, with a few minor exceptions, Suez and Veolia had highly complementary businesses, Mr Frérot said. The company said the operation would create value from its first year for Veolia shareholders, largely as a result of operational and purchasing synergies estimated at €500m.
Veolia said it was particularly strong in central and eastern Europe and the UK, while Suez’s traditional markets included Spain and northern Europe. A merger would reinforce a combined group’s positions in South America, North America, Asia and Australia.
Advisers to Veolia included Messier Maris and Perella Weinberg and law firm Cleary Gottlieb, while the company’s board was advised by Citi and French law firm Gide.