Econostrum | Economic News in the Mediterranean

The arm wrestling continues between Veolia and Suez with Engie as arbitrator

Written by Frédéric Dubessy on Monday, October 5th 2020 à 16:46 | Read 318 times

FRANCE. In two press releases published on Sunday 4 October 2020, after its Board of Directors meeting, Suez (€18 billion turnover in 2019 and 90,000 employees) reasserted loud and clear its refusal to let Veolia in (€27.19 billion turnover in 2019 and 180,000 employees). Its competitor intends to buy Engie's 29.9% stake in Suez (€60.1 billion turnover in 2020 and 170,000 employees).

In a letter made public to Antoine Frérot, CEO of Veolia, whom he speaks to on a first-name basis, Philippe Varin, his counterpart at Suez, writes that his group has "demonstrated during our last exchanges of good will and has spared no effort in the search for a solution acceptable to all, built on the project to retain in France a second world-class player with an agile and technological profile in the water and environmental services sectors. The proposals you have made do not take up the objective of industrial logic". He concludes that his Board of Directors has decided that "the proposed operation, notably the first stage of the purchase of the 29.9% block of Suez shares by Engie, remains hostile".

Philippe Varin thus acknowledges the failure of the discussions with Veolia. A second press release from Suez indicates that it supports the sale of its 29.9% shares to the Ardian fund. "The Board confirms that this project is in the social interest of the group, its shareholders, clients and all its stakeholders".

​Closing date of the offer: 5 October 2020

Veolia's reaction was immediate. Also by way of a press release, it "unconditionally undertakes not to file a hostile takeover bid following the sale of the shares held by Engie in Suez. Any takeover bid for the remaining shares in Suez will therefore require the prior favourable opinion of the Board of Directors of Suez". Veolia is therefore meeting Engie's expectations.

On Wednesday 30 September 2020, the Board of Directors of Engie "welcomed" Veolia's offer to buy 29.9% of the 32% of Suez shares it holds. All the more so as at the last moment, Veolia decided to increase its price from €2.9bn offered at the end of August 2020 to €3.4bn. However, Engie intends to delay. "The Board considered that this new offer meets its expectations in terms of price and social guarantee (...) Given the importance of the stakes for all stakeholders, the Board has decided to ask Veolia to extend the validity of its new offer until 5 October 2020 so that Veolia can formalise its unconditional commitment not to launch a takeover bid that is not friendly", indicated a press release from Engie.

Engie will make its decision before the end of the day on Monday 5 October 2020.

The text of Veolia's press release states that Veolia supports Suez's request to the public authorities to "extend the scope of the assets sold to the buyer of Suez Eau France to include water assets outside France for a total turnover of around €5 billion (including the €2.2 billion of Eau France).


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