If the offer is accepted by Engie, Veolia – which is also active in the water and energy sectors – says it will file a “voluntary tender” for the remaining Suez shares.
[note: updated 4 September, Engie holds 32% of Suez shares. Veolia wishes to buy nearly all the shares amounting to a 29.9% level of Suez ownership and then make an offer for the whole of Suez]
Suez issued a statement shortly after, saying 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,” Suez said in a statement.
Both Veolia and Suez have UK subsidiaries which have a substantial role in the UK’s sustainable waste and resource management sector.
Veolia’s 30 August statement says that by “combining the very solid skills of Suez and Veolia, this transaction would be able to significantly accelerate the development of the new entity in the face of growing competition, and would enable the industry in France, Europe and the world to meet the environmental challenges of the 21st century”.
It gave 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.
Veolia’s statement claimed that the two companies share a common nationality, corporate culture and know-how. They “are also complementary in water treatment and distribution, waste collection and recovery, particularly hazardous and toxic waste, plastics recycling, soil remediation, air quality and optimization of energy consumption”.
“All these skills, brought together under the same brand name and supported by a team united by the same values, provide a complete range of solutions”, the statement said.
Veolia said that in a particularly fragmented volume market, “innovation is fundamental to inventing and developing the technologies that are still missing to fully succeed in the ecological transformation”.
The combination of talent and research skills would accelerate this, Veolia said.
It added: “In addition, the operation would lead to the establishment of a new professional training center, providing all the necessary levels of skills for the new professions that will be created by the ecological transformation, and thus launch a dedicated European school of ecological transformation in France.”
Veolia added that by consolidating the key geographies in which the two groups operate, the new group’s international footprint would be strengthened, with a significantly increased share of the world’s fast-growing regions.
“By consolidating the key geographies in which the two groups operate, the new group’s international footprint would be strengthened”
“Veolia is particularly well established in Central and Eastern Europe and the United Kingdom, while Suez’s historical geographies are in Spain and Northern Europe,” the statement said.
It noted: “Outside Europe, where the main growth regions for our businesses are located, the company would double in size in South America and Australia, while significantly strengthening its positions in North America and Asia”.
The sale by Engie of its stake in Suez “would take place at the ideal time to complete this combination”, Veolia said.
The reorganisations carried out in recent years by the two groups make them “more compatible and complementary than ever”.
Veolia pointed to the two companies recent strategic plans, Shaping 2030 for Suez and Impact 2023 for Veolia. These, according to Veolia “are convergent and both clearly oriented towards international markets with high growth and innovation potential”.
For employees,” this new, more innovative and international entity would offer even more perspectives and opportunities”.
Veolia said the transaction “would be carried out without any negative impact on employment in France”, but didn’t mention other markets.
“In addition, all customers, local authorities and industrial clients, would find in this new entity a partner that would enable them to achieve their own ecological transformation objectives much more quick,” the statement added.
Antoine Frérot, chairman and CEO of Veolia said: “This project will enable us to complement the solutions we provide to public and private actors in order to give them the means to sustainably reduce their environmental impact. This historic opportunity will enable us to build the French world champion in ecological transformation, while accelerating international development and strengthening the new entity’s capacity for innovation. This project is part of a friendly approach, as we share the same businesses, corporate culture and values with Suez.”
The announcement comes around a month after Suez reported an “overall improvement” in business trends in June compared to the low point of April/May in most regions in which it operates (see letsrecycle.com story).
This update came amid reports in the financial press that Suez was preparing to sell some of its waste businesses on the continent.
In 2012, the two companies rejected reports that they were planning to merge (see letsrecycle.com story)
A report on the Financial Times in October had suggested that Veolia and Suez had held preliminary talks about a merger before deciding a deal would face too many hurdles over relative valuations and competition concerns. As a result, the companies put out statements in a bid to quash talk of a deal.
The deal, if successful, will be subject to the the necessary regulatory authorisations, in particular with respect to competition. Veolia estimates this could be obtained within 12 to 18 months