Veolia to buy Engie’s Suez stake in prelude to full takeover

Bloomberg

Veolia Environnement SA will buy a 29.9% stake in Suez SA from Engie SA for 3.4 billion euros ($4 billion), setting the stage for a full takeover — and potentially a long and acrimonious corporate battle.
Engie’s board agreed to sell the stake after Veolia increased its price for its holding by 16% and offered guarantees on employment. A full takeover would create a global giant in waste and environmental services. But Suez, which has tried to thwart the purchase, remains fiercely opposed to what it calls a “hostile” approach, and said again it would use all the means at its disposal to protect its stakeholders’ interests.
Combining Veolia with its smaller rival would create a French national champion with more than 40 billion euros in sales worldwide. The deal would have to clear antitrust hurdles and overcome the French government’s concerns about job losses. The Finance Ministry, which owns more than a fifth of Engie and had pushed for
a friendly outcome, voted against the sale of the stake.
“Veolia has pledged to maintain jobs until the end of
2023, which is a very valuable commitment in the current backdrop,” Engie Chairman Jean-Pierre Clamadieu said. “Both companies will have to find a common ground” because “a merger needs to be friendly to be successful.”
Veolia has made an unconditional commitment not to make a hostile bid, Engie said. To proceed on a friendly basis would require a major change of heart from Suez, which has pledged to “use all means at its disposal to avoid a creeping takeover.”
In a statement, Veolia pledged to launch a takeover bid at 18 euros per share once it receives regulatory approval. The company reserves the right to change the offer price in the event of any asset disposals, acquisitions or other events that impact Suez’s balance sheet.