The French environmental services group Veolia Environnement SA on Sunday said it wants to buy 29.9 percent of rival Suez SA from energy company Engie SA to build a “world champion in ecological transformation.”
Veolia’s offer, worth an estimated 2.9 billion euros (US$3.5 billion), would leave Engie with a holding of just over 2 percent in Suez that it could sell later when Veolia makes a planned public offer for the remaining shares.
“This historic opportunity will enable us to build the French world champion in ecological transformation,” Veolia chairman and chief executive Antoine Frerot said in a statement.
Photo: Reuters
“This project is part of a friendly approach, as we share the same businesses, corporate culture and values with Suez,” he added.
The transaction would create a company with combined revenue of more than 40 billion euros, with plants treating everything from water to plastic and hazardous waste across the globe.
It comes as utilities try to revive earnings dented by the COVID-19 pandemic, and as governments push to spend more on environmental services in their economic stimulus packages.
All three companies are French and to overcome potential competition issues, Veolia said it would sell Suez’s French water, engineering and research activities to Meridiam, a French infrastructure management company.
While the government made “no comments” when Veolia informed it of the plans, Frerot expressed confidence the bid would go through.
Suez presented a plan last year to overtake Veolia as No. 1 in France. On Sunday, it said only that it had taken note of the Veolia press release.
“The approach of Veolia has not been solicited and has not been discussed at all with Suez,” a statement said.
“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,” it added.
Engie said in a statement that it would study the offer over the coming weeks to choose a solution that was best for its shareholders.
If the offer is successful, Veolia will make an offer for the rest, using the price paid to Engie as a reference point, and taking into account any subsequent significant events affecting Suez.
Suez shares yesterday rose as much as 20 percent in early trading in Paris, suggesting some investors doubt Veolia’s bid would be successful.
Additional reporting by Bloomberg
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