French water and waste firm, Veolia is seeking to acquire a 29.9% stake in Suez from French gas and power utility Engie saying it aims to create a “world champion of ecological transformation”.
Veolia Chief Executive Officer Antoine Frérot stated that if Engie accepts the offer, Veolia will officially bid for the rest of Suez.
However, Suez has issued a statement saying that Veolia’s approach was unsolicited and was not the subject of any discussion with the company, adding that its board would meet as soon as possible to study the operation.
“SUEZ takes note of the press release of its competitor Veolia. The approach of Veolia has not been solicited and has not been discussed at all with SUEZ. SUEZ will convene its Board of directors shortly in order to study the operation as well as its contemplated impacts, in view of the interest of the Company, its shareholders, its employees and all its stakeholders.” Read the statement.
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According to Frérot, Suez’s enterprise value, which includes debt was around US $23.8 billion.
Engie has stated that it will favour the most attractive solution for its shareholders after taking into consideration the quality of the industrial project.
Veolia estimated potential operating and purchasing cost savings at US $598 million as a result of a takeover. It said a deal, which would come in the middle of the coronavirus crisis, would have no negative impact on employment in France.
Both Veolia and Suez have undertaken projects across Africa. Veolia has subsidiaries in Africa which have a substantial role in Africa’s sustainable waste and resource management sector.
Veolia believes that the combination of Veolia and Suez’s solid skills would significantly accelerate the development of the new entity in the face of growing competition, and enable the industry meet the environmental challenges of the 21st century.
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It outlined five “pillars” of its rationale for the bid: Broader expertise and an enlarged commercial offer; an increased capacity for innovation; strengthened geographical positions; a natural combination of forces; and, a transaction that creates value for all stakeholders.
According to Veolia, both companies share common interests and features that combining their talent and research skills would accelerate the development of the new entity in the face of growing competition.
The deal, if successful, will be subject to the necessary regulatory authorisations, in particular with respect to competition. Veolia estimates this could be obtained within 12 to 18 months
