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Veolia offer “carries great uncertainties”, Suez warns


Suez's board of directors highlighted
the weaknesses of Veolia's fusion plans.
02.09.2020 − 

A day after its initial, tersely worded response to the news that Veolia was mounting a takeover bid, the French group Suez issued a second statement. The environmental services company reported that its board of directors “unanimously reiterated its full confidence” in Suez's strategic project that “will create significant value for Suez as an independent company”. Veolia's unsolicited offer "carries great uncertainties". 

Suez argued that the company's second quarter results and the implementation of its "Suez 2030" transformation plan had demonstrated its "strong operational resilience". The company warned that "the strategy proposed by Veolia would generate dis-synergies and loss of opportunity in France and abroad". Suez also called into question the impact a takeover by Veolia would have on water activities and on employment levels in France, given the amount of synergies announced by Veolia. The group's CEO Antoine Frérot had put them at €500m at the Ebitda (earnings before interest, tax, depreciation and amortisation) level.

Suez was also sharply critical of the timing of the takeover attempt. “The complexity of the chosen process would lead to two years of operational disruption whilst, in a post-Covid context, the teams are focused on implementing their strategic plan,” the company said.

The first step in the path to a takeover of Suez would be the acquisition of a 29.9 per cent stake in the concern from the French utility Engie. On Tuesday, the news agency Reuters reported that Engie was holding out for more money. Sources cited by Reuters and France's 24 hour news channel BFM put the price the utility company was seeking at around €17 per share. Veolia has offered €15.50, which would put the total value of Veolia's initial offer to Engie at €2.88bn.

This article is part of EUWID's on-going coverage of Veolia's bid to take over rival environmental service giant Suez. Additional coverage of Veolia's stock purchase offer as well as the full article on Suez's reply to the offer can be found in  in the print and e-paper editions of EUWID Recycling & Waste Management 18/2020 out on 2 September.

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