Veolia and Suez reach merger agreement

Veolia and Suez announced this morning (12 April) they have reached an agreement in principle for a merger between the two groups.

The French-owned companies agreed on a price of €20.50 (£17.71) per share for Suez, up from Veolia’s initial €18 offer. The financial press say this values Suez at around €13 billion (£11.24 billion).

The two companies released a joint statement on the agreement this morning (12 April)

According to a joint statement released this morning, the offer will be recommended by the board of directors of Suez when the final agreements are signed, subject to regulatory approval.

Under the terms of the agreement, a “new Suez” will be formed with revenues of €7 billion.

This will be made up of the municipal water and solid waste activities of Suez in France, as well as “the activities of Suez in particular in water” in Italy, the Czech Republic, Africa, Central Asia, India, China and Australia, and the global digital and environmental activities.

This would appear to mean that subject to regulatory approval, all Suez’s operations in the UK will transfer to Veolia.  However, details of how Veolia/Suez will shape their UK businesses is still to be revealed.

This comes after the UK competitions regulator has published its latest derogation notice as part of its investigation into any potential merger between the two groups (see letsrecycle.com story).

‘Beneficial for everyone’

Antoine Frérot, chairman and chief executive officer of Veolia, said: “I am particularly pleased to announce today the conclusion of an agreement between Suez and Veolia which allows the construction of the world champion of ecological transformation around Veolia, in offering France a benchmark player in a sector which is probably the most important of this century.

“This agreement is beneficial for everyone: it guarantees the sustainability of Suez in France so as to preserve competition and it guarantees employment. All the stakeholders of the two groups are therefore the winners. The time for confrontation is over, the time for reconciliation has begun.”

‘New Suez’

The joint statement this morning explained that in order to “guarantee the conditions for the long-term development” of the ‘new Suez’, a number of commitments must be met.

“I am particularly pleased to announce today the conclusion of an agreement between Suez and Veolia”

Antoine Frérot, chairman of Veolia

This includes ensuring its shareholders “will have to subscribe to social commitments for four years from the closing of the takeover bid” as well as to “maintaining their long-term positions in principle”.

According to the statement, the agreement reached today also provides for the “termination of Suez’s agreements” with Australian firm Cleanaway. The statement added this is “in accordance with their terms concerning the disposal of assets in Australia (subject to the Sydney assets) and the suspension of any other significant disposal”.

It will also mean the suspension of ongoing proceedings and, upon signing of the final agreements, the withdrawal of Suez and Veolia from all pending litigation and the failure to introduce new proceedings between them.

The deal will also ensure “the full cooperation of Suez, Veolia and the shareholders of the new Suez to obtain all the necessary authorisations as soon as possible”.

‘Solution’

Philippe Varin, chairman of the board of directors of Suez, said: “ We had called for a negotiated solution for many weeks and we have today found an agreement in principle which recognizes the value of Suez. We will be vigilant to ensure that the conditions are met to reach a final agreement making it possible to put an end to the conflict between our two companies and offering development prospects.”

Bertrand Camus, chief executive of Suez, welcomed today’s agreement

Bertrand Camus, CEO of SUEZ , declared: “This agreement in principle gives every opportunity to obtain a global solution that would offer the social guarantees essential for all employees and prospects. I would like to thank all the Suez teams for their tremendous mobilisation in the implementation of the Suez 2030 strategic plan, of which everyone can be proud. I know that I can count on them to stay focused in the coming months to ensure the best quality of service to our customers.”

Row

The solution looks to have brought to an end what has turned into a bitter row between the two companies over any potential deal.

This began in August 2020 when Veolia outlined its intentions to offer for Suez, before completing a 29.9% acquisition of the company from Engie in October for €3.4 billion (see letsrecycle.com story).

In March 2021, in one of a string of statements released by the two companies, Suez rejected an offer from Veolia of €18 per share for 70.1% of the company. This valued Suez at around £9.6 billion based on currency values at the time.

The agreement comes less than a week since Veolia directors also said a sale of Suez will be “welcomed” by the UK market and will help to boost recycling (see letsrecycle.com story ).

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