A report in the Financial Times yesterday (21 October 2012) suggested that French duo Veolia Environnement and Suez Environnement had held preliminary talks about a merger before deciding that a deal would face too many hurdles over relative valuations and competition concerns.
As a result, the companies put out statements on Saturday in a bid to quash talk of a deal. Suez said: “Suez Environnement denies that it is working on a business combination with Veolia Environnement”.
Veolia Environnement said: “Following market rumours, a merger with Suez Environnement is not on the agenda”.
Talks
According to the FT, people close to the companies conceded that preliminary talks had taken place, prompted by Suez, but had not gone as far as being officially discussed by the two boards. It said that concerns over competition may have been one of the factors behind this.
It added: “Some said the biggest block to a merger was the failure to agree on how to value the two companies. Veolia is far bigger than Suez, with 30bn Euros of sales in 2011 compared to 15bn Euros at Suez, but its shares have suffered badly because of heavy writedowns related to problems in its [Veolia’s] international businesses and worries about its 15bn Euros of net debt.”
Veolia Environnement has more than 330,000 employees and provides services in water management, waste management and energy management. The company recorded revenue of 29.6 billion in 2011.
Suez Environnement, owned 35,7% by GDF Suez, has 80,410 employees and provides water and waste management services and in 2011 achieved revenues of 14.8 billion.
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