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SUEZ offers Veolia new solution supported by Ardian- GIP, Veolia not interested

  • SUEZ offers Veolia new solution supported by Ardian- GIP, Veolia not interested
ACCIONA
Idrica

The SUEZ Board of Directors proposed on Sunday a negotiated solution with Veolia, saying it was ready to enter into negotiations to break the current deadlock.

On March 20, the Ardian-GIP consortium submitted a firm and binding offer to the SUEZ Board of Directors for the creation of a new entity. The proposal made by the  consortium was unanimously approved by the SUEZ Board of Directors.

A statement by Suez read: “The offer provides for the acquisition by the Consortium of several activities including all the French “Water” and “Recycling and Recovery” (R&R) activities, as well as several “Water and Technology” activities at the international level. On this basis a negotiation can start and it must aim to ensure a healthy level of competition for customers, and, for SUEZ employees, a plan for the future and for their professional development. This combination will enable the Group to maintain its technological leadership through high levels of investment in Research and Development.”

The cash consideration proposed for all the relevant activities amounts to an enterprise value of €15.8 billion, equivalent to a value of €20 per share.

The Board of Directors of SUEZ is proposing entering into negotiations on this basis, with the aim of finalizing them as soon as possible and no later than April 20. The SUEZ Board of Directors is prepared to recommend an agreement that (i) incorporates a solution based on that contemplated with the Consortium, as described above, (ii) would enable Veolia to confirm its 4-year corporate commitments and (iii) would increase Veolia’s offer price to a minimum of €20 per share (cum dividend).

Philippe Varin, Chairman of SUEZ, stated: “The SUEZ Board of Directors has confirmed its willingness to find a negotiated solution with Veolia that is in the interest of its employees, customers, and shareholders. We now have a solution, supported by a new proposal from Ardian – GIP, which would enable the two companies to finalize an agreement in the interest of all the stakeholders, and that also meets the objectives set by the French State. The Board of Directors is ready to begin negotiations on this basis immediately.”

Adding: “If, contrary to SUEZ’s wishes, a negotiated solution has not been found by April 20, 2021 at the latest, the Board will accelerate the implementation of the SUEZ 2030 strategic plan in order to create value for all stakeholders well in excess of Veolia’s current offer. The Board will continue to explore all available options to show the value potential of each of its core businesses: “Recycling and Recovery” and “Water and Technologies”. This will result in enhanced opportunities for all SUEZ employees.

The SUEZ Board of Directors also took the decision to make the safeguarding mechanism for retaining the “Water France” activity within the Group irreversible until September 2024.

However, the company announced that the mechanism had been amended to provide for its dissolution in either of the two following cases:

  • If an agreement on the main principles of a transaction comprising a potential tender offer for SUEZ’s shares is reached no later than April 20, 2021,
  • If a public cash tender offer equal to at least €22.5 per share is the subject matter of a public commitment of an offeror no later than May 5, 2021, with or without the recommendation of the SUEZ Board of Directors.

In the company’s press release, Suez said that if Veolia withdraws its offer within six months, the Consortium could consider the filing of a tender offer on the whole share capital of SUEZ. The implicit consideration of this offer, calculated on the basis of the valuation of all the activities included in the Consortium’s offer, would be equal to €20 per share (cum dividend).

Veolia’s reaction

On the same day, Veolia reiterated that it is not interested in the dismantling of Suez.

In a statement, the firm said: “Veolia will not sell or exchange its 29.9% stake in the capital of Suez. The tender offer filed by Veolia is still irrevocable even after the activation of the Dutch entity and is the only offer for the entire capital of Suez.”

It also stated that until the Board of Directors of Suez had formally agreed to the scope of the new Suez proposed by Veolia and until the Dutch entity is dissolved, Veolia would not be open to discussions with Suez.

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