Paris-based Veolia says it has made “a firm offer” to France-based utility firm Engie for the acquisition of the 29.9 percent stake Engie holds in Paris-based environmental services firm Suez.
Veolia says this offer follows Engie’s announcement July 31 of the launch of a strategic review including its stake in Suez. The proposed price of 15.50 euros ($18.58) per share represents a premium of 50 percent over the closing price of Suez on July 30, unaffected by the announcement of Engie’s intentions.
Veolia says the offer has been unanimously approved by its board of directors, and if the offer is accepted by Engie, Veolia intends to then “file a voluntary tender offer for the remaining Suez shares.”
Anticipating the potential for antitrust questions tied to the merger, Veolia has spelled out measures it would take proactively to help a merger wade through such concerns, with the predominant one tied to the water management activities of the two firms.
Veolia says, “In this context, Veolia has identified an acquirer for Suez’s French water activities, Meridiam, a French infrastructure management company, capable of preserving competition and employment.”
In the waste and recycling sectors, Veolia offers less detail, writing, “In addition, the other identified areas of competition would concern certain waste management activities in France and a very few cases outside France.”
On the overall concept of a merger, Antoine Frérot, chairman and CEO of Veolia, states, “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.”
Frérot and Veolia point to “five pillars” that offer a rationale for the merger, including the ability of a combined company to offer “a complete range of solutions” to government jurisdictions and corporate clients in several sectors, including “hazardous and toxic waste [and] plastics recycling.”
“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,” Veolia says.
The two companies are most active, by far, in Europe. In the Americas, Veolia (in addition to offering water quality and corporate energy services from a North American head office in Boston) concentrates on specialty and hazardous waste services to corporate clients in the United States. The firm also serves the waste and recycling, energy and water sectors in Central and South America.
Suez bases its North American operations in Paramus, New Jersey, from where it focuses on water and wastewater treatment services for the continent. The company also offers waste and recycling services in Central and South America. In a late 2018 news release, Suez said Latin America accounted for seven percent of its global revenue, and that it had 7,000 employees working in 10 countries there. The company also is active in Asia.