Veolia outlines bid to acquire 29.9% stake in rival Suez

Veolia has made a firm offer to acquire 29.9% of Suez from Engie, to create the French world champion of ecological transformation – the all-cash proposal at a price of €15.50 per share represents a 50% premium on the Suez share price on July 30.

The offer, which followed Engie’s announcement on July 31, 2020 of the launch of a strategic review including its stake in Suez, is valid until September 30, 2020.

The offer, unanimously approved by Veolia’s Board, would be paid in cash. If it is accepted by Engie, Veolia intends, following the acquisition of the 29.9% of Suez shares, to file a voluntary tender offer for the remaining Suez shares.

The filing of the voluntary tender offer will be completed as soon as the necessary regulatory authorizations, in particular with respect to competition, have been obtained within 12 to 18 months.  However, Veolia has reserved the right to file the public offer at any time before obtaining these authorizations.

The price will take into account the price paid to Engie for its 29.9% block of shares, and any subsequent significant events affecting Suez. Veolia’s proposal to Engie includes a commitment by Engie to contribute its remaining 1.8% stake in Suez to the public offer.

Commenting on the bid, Antoine Frérot, Chairman and CEO of Veolia said:

“The environmental urgency is stronger than ever, given the state of natural resources and climate change. The growing pressure of public opinion, the European Green Deal and the stimulus packages that are being announced in many countries make ecological ambition a necessity.

“This project will enable us to complement the solutions we provide to public and private actors in order to give them the means to sustainably reduce their environmental impact. This historic opportunity will enable us to build the French world champion in ecological transformation, while accelerating international development and strengthening the new entity’s capacity for innovation. This project is part of a friendly approach, as we share the same businesses, corporate culture and values with Suez.“

Veolia said that by combining the very solid skills of Suez and Veolia, this transaction would be able to significantly accelerate the development of the new entity in the face of growing competition, and would enable the industry in France, Europe and the world to meet the environmental challenges of the 21st century.

The two companies, which share a common nationality, corporate culture and know-how, are also complementary in water treatment and distribution, waste collection and recovery, particularly hazardous and toxic waste, plastics recycling, soil remediation, air quality and optimization of energy consumption.

An increased capacity for innovation

An enhanced capacity for innovation would also be supported in particular by French small and medium-sized companies working on innovation in the major areas of ecological transformation, through a support fund set up by the new entity.

In addition, the operation would lead to the establishment of a new professional training center, providing all the necessary levels of skills for the new professions that will be created by the ecological transformation,  together with the launch of a dedicated European school of ecological transformation in France.

Strengthened geographical positions

Veolia believes that the new group’s international footprint would be strengthened as a result of the complementary nature of Suez’s and Veolia’s different geographies and by consolidating the key geographies in which the two groups operate – resulting in a significantly increased share of the world’s fast-growing regions.

Veolia is particularly well established in Central and Eastern Europe and the United Kingdom, while Suez’s historical geographies are in Spain and Northern Europe.

Outside Europe, where the main growth regions for its businesses are located, the company would double in size in South America and Australia, while significantly strengthening its positions in North America and Asia.

Messier Maris & Associés, and Perella Weinberg Partners are acting as financial advisers to Veolia for the transaction, Cleary Gottlieb Steen & Hamilton LL.P., Professor Xavier Boucobza, Me. Patrice Gassenbach, Peltier Juvigny Marpeau & Associés and Hogan Lovells, Flichy Grangé Avocats as legal advice. Citi and Gide are the financial and legal advisers of the board of directors.