Analysis: Is SUEZ set to be taken over one way or the other?


Yesterday saw a fresh twist in Veolia’s hostile attempt to buy fellow French waste management company SUEZ.

The board of SUEZ accepted an offer from the consortium made up by French investment company Ardian and international private equity firm Global Infrastructure Partners (GIP).


Essentially, the Ardian/GIP proposal means it would buy the French water and recycling and waste assets of SUEZ. It would also purchase SUEZ’s international water and technology businesses.

According to the SUEZ board, that has accepted the €20 (£17.90) per share offer for these assets, this enables Veolia to negotiate for the remainder of the SUEZ business. This would value SUEZ at €15.8 billion (£13.58 billion) and would remove €11.9 billion (£10.29 billion) worth of the business, leaving Veolia with a much smaller portion than it wants.

The board of SUEZ also argues that this solution would enable Veolia to meet the requirements of French competition law.

SUEZ chairman Philippe Varin said: “The SUEZ board of directors has confirmed its willingness to find a negotiated solution with Veolia that is in the interests of its employees, customers and shareholders.

“We now have a solution, supported by a new proposal from Ardian/GIP, which would enable the two companies to finalise an agreement in the interest of all the stakeholders, and that also meets the objectives set by the French state. The board of directors is ready to begin negotiations on this basis immediately.”

However, Veolia has rejected this offer. In a hard-hitting statement, Veolia accused the SUEZ board of creating “uncertainty where none exists”.

It also warned that there cannot be further discussions between the boards of Veolia and SUEZ until the latter has agreed to the scope of the new proposal submitted by Veolia. It has previously offered €18 (£15.47) per share for the rest of the business on top of the 29.9% it currently owns.

Veolia also wants SUEZ to dissolve the Dutch company that holds the assets of SUEZ’s French water business, and whose board has veto rights over any disposal of the entire firm.

It also said it will not negotiate until the rushed sale of SUEZ’s strategic international assets have been suspended and until the legal proceedings that SUEZ has initiated to prevent the sale have been withdrawn.

SUEZ has said it will disband the Dutch company if an agreement is found with Veolia or if Veolia increases its offer to €22.50 (£19.34) per share by 5 May. SUEZ has also set a deadline for an agreement of no later than 20 April.

It appears the SUEZ board is now attempting to force Veolia to decide whether to up its offer for the whole business to at least €20 per share and bring it to the negotiating table.

Veolia’s board now appears to have a decision to make on whether to attempt to buy the whole of Suez at €20 per share, to buy parts of the company possibly at a lower valuation, or alternatively walk away and be left with its existing shareholding.

Ardian/GIP are hopeful that a negotiated solution will enable it to buy the parts of SUEZ it wants and Veolia will be able to purchase the rest.

But the consortium has also raised the possibility that it could buy all of SUEZ. In a statement, it said: “In the event that Veolia withdraws its offer within six months, the consortium could consider making a public offer for the entire share capital of SUEZ.

“The implicit price of this offer, calculated on the basis of the valuation of all the activities concerned, would be €20 per share (coupon attached), subject to the support of the SUEZ board of directors, the SUEZ unions, the public authorities, due diligence on the rest of the group and the ability to finance such an offer.”

As things stand, it appears that SUEZ looks more likely than not to be under new ownership at some point in the future. Whether this is Veolia, Ardian/GIP or not, remains to be seen.

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