On Sunday (21 March) Suez revealed an offer it received the previous day from a consortium made up of the investment companies Ardian and GIP, which the board unanimously approved.
This would see all Suez’s French water and recycling and recovery activities sold to Ardian and GIP, as well as several water and technology activities internationally. This would equate to just more than half the company.
Suez says this values the company at €20 per share, and €15.8 billion overall. This is higher than Veolia’s offer of €18 per share. Under the proposals, it also urged Veolia to increase its offer to €20 per share for the remaining parts of the company.
Suez added that this would enable French employees to see its activities in France continue, with their social benefits and their jobs maintained for at least four years.
Suez added in its statement that it now wants to enter into negotiations with Veolia that it said should finish by 20 April.
Offer
Suez added that it would allow Veolia to acquire the whole of Suez if a public cash offer of at least €22.50 per share is the subject of a public commitment by an offer no later than 5 May.
It added that if Veolia was to withdraw its public offer within six months, Ardian and GIP could make a bid for the whole of Suez at €20 per share.
“Suez’s board of directors affirms its desire to find a negotiated solution with Veolia in the interest of its employees”
Philippe Varin, chairman of the board of directors at Suez, said: “Suez’s board of directors affirms its desire to find a negotiated solution with Veolia in the interest of its employees, customers and shareholders. We now have a solution, supported by a new proposal from the Ardian Consortium and GIP, which would allow the two companies to finalize an agreement in the interest of all stakeholders, and which also meets the objectives set by the state. In this context, the board of directors is ready to begin negotiations immediately.”
Proposal
The proposal from Suez came 10 days after Veolia submitted updated plans for how it intends to bid for the remaining 70.1% share in Suez. Veolia owns 29.9% of the company after acquiring it from Engie last year (see letsrecycle.com story).
In its proposals, Veolia said it would see Suez’s French operations sold to investment fund Meridiam, with Veolia taking over water and waste management activities outside of France (see letsrecycle.com story). This offer was also swiftly rejected.
Response
Veolia yesterday hit back at the proposals, saying that the management of Suez has “tried in vain to create uncertainty where none exists”.
“The management of Suez has tried in vain to create uncertainty where none exists”
It also warned Suez that it will not sell or exchange its 29.9% stake.
Veolia’s statement said: “The proposal made by Veolia about 10 days ago to guarantee the integrity of Suez in France in the event of a prior agreement shows that Veolia is making every possible effort to ensure that the new Suez is of a size that enables it to develop, including outside France, while, thanks to the mission-led company Meridiam, guaranteeing the stability of its shareholder base for 25 years, preserving all jobs and social benefits, maintaining genuine and robust competition, and doubling investments in the next five to seven years.”
Veolia added that there cannot be any discussions with the management of Suez until a number of conditions have been met. This includes until Suez has formally agreed to the scope of the new Suez proposed by Veolia, and the “rushed sales of Suez’s strategic international assets have been suspended”.
It added: “Furthermore, Veolia notes an evident conflict of interest in the Suez press release, that is both surprising and shocking: the approach taken by the directors of Suez is to promote their own personal and property interests by offering the company’s assets to two short-termist funds to choose from à la carte. This is clearly contrary to the corporate interest of the group and of its shareholders, who still have nothing but an offer that is illusory when compared to that of Veolia.”
Veolia concluded by saying it will be for Suez shareholders to decide on these various matters involving the group’s future, and for the courts to rule on the individual responsibility of the directors concerned.
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