PARIS – Peace trials in water warfare. Veolia and Suez have announced that they have reached an agreement for the merger. After months of legal and media battle, there is finally a basis of understanding between the two French groups competing in the water and waste management sectors. The two companies agreed on a price of 20.50 euros per Suez share “conditional on the conclusion of the approximation agreement”, against the 18 euros per share initially offered by Veolia. The merger should allow the creation of a “world champion of ecological transformation” of waste, with a turnover of around 37 billion euros.
Not only was Veolia’s price hike unblocked, but also the decision to create a “new Suez” with mainly French shareholders, including financial partners of both groups and workers’ representatives. Suez will therefore continue its activities in the water sector for municipal and solid waste companies in France, but also in various geographical areas including Italy. Veolia, whose advisor is the investment bank Messier controlled by Mediobanca, also has several stakes in Italian utilities.
The incredible feuilleton began in late summer when Veolia announced it was in talks with the Engie group to take back its stake in Suez. In theory it was an amicable operation but the leaders of the rival group could not bear to be faced with a fait accompli. Veolia acquired 29.9% of Suez from Engie in October, before launching a takeover bid for the rest of the shares. Suez management raised the barricades, multiplying lawsuits and a media campaign. The story took a political turn, with the Minister of Economy Bruno Le Maire intervening on several occasions, and again at the end of March, to advocate an understanding between the two rivals.
Satisfied with Antoine Frérot, the CEO of Veolia who for months had been chasing the birth of the new creature, protagonist in a strategic and highly competitive market. “This agreement is beneficial to everyone – says Frérot – because it guarantees the long-term future of Suez in France in order to preserve competition, and guarantees jobs”. The agreement should be finalized in the coming weeks. “This agreement in principle gives us all the possibilities to obtain a global solution that can offer the essential social guarantees for all employees,” said the CEO of Suez, Bertrand Camus. The chairman of the board, Philippe Varin, also promises: “We will be vigilant to ensure that the conditions are met to reach a final agreement that puts an end to the conflict between our two companies ”.
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