Suez’s board of directors has rejected an offer of €18 per share for 70.1% of the company from fellow French waste management business Veolia.
A takeover battle has been waged between the waste sector giants since Veolia bought a 29.9% stake in Suez from Engie in October and announced its intention to acquire the rest (see letsrecycle.com story). Suez has characterised Veolia’s approach as “hostile” throughout.
Having issued a formal proposal in January, Veolia filed a tender offer of €18 a share for the remainder of Suez on 7 February (see letsrecycle.com story).
This would value the company at £9.68 billion in today’s currency.
In a statement published on 26 February, Suez said its board of directors had decided at a meeting held two days previously that neither the offer nor Veolia’s intentions were “acceptable”.
The board is said to have met on several occasions throughout January and February to discuss Veolia’s offer.
The statement reads: “The Board of Directors reiterates its wish to find a negotiated solution. It will take whatever steps necessary to make sure that Veolia does not impose its interests at Suez’s shareholders’ meeting.”
It added: “The Board of Directors would like to express its gratitude to all Suez employees for their commitment to Suez’s customers through the pandemic and the disruptions linked to the Veolia offer. Suez’s Board will ensure that their interests are upheld under all circumstances.”
Suez’s board of directors used the statement to reiterate its desire to reach a solution that “delivers a fair valuation of the Group for its shareholders, provides social guarantees for employees, ensures that all the Group’s commitments to its customers are maintained and conforms to Suez’s corporate interest”.
It says the price offered by Veolia, which it suggests would be payable in May 2022 “at the earliest”, is “not satisfactory”. It cites several reasons why.
The intrinsic value of Suez is well above the price offered, as illustrated by the company’s results for 2020, the statement says.
Suez says the economic and financial environment has improved “significantly” since Veolia acquired Engie’s stake in the company.
It claims the €18 per share offer price “discriminates” against Suez’s minority shareholders as compared with Engie. It suggests the reference share price as well as other valuation metrics selected by Veolia in its draft offer document are “out of date” and “misleading”.
And, Suez says the €18 per share offer price does not take into account the “synergies” that Veolia put forward in its offer document.
The social commitments made by Veolia are also “unsatisfactory”, according to Suez.
It adds the proposed deal “exposes our customers and shareholders to significant execution risk” and raises “significant” antitrust issues, within the European Union and in the UK.